A REDUCTION in VAT on holiday accommodation and leisure attractions in the UK is needed to help tourist businesses compete against their European counterparts, according to a city accountant.

Billy Cairns, a VAT partner at PKF, has warned that when the UK’s VAT rate reverts to 17.5% in January, it would mean that UK hotels were paying three times more VAT than in many other European countries.

The UK already has a lower rate of VAT, at 5%, to reduce the tax burden in specific areas and that could be extended to include tourism, giving the industry a much-needed boost.

In Germany, from the beginning of 2010, the VAT rate for hotels will drop from 19% to 7%, a move warmly welcomed by German hoteliers. France has long enjoyed a reduced rate of VAT on visitor attractions of 5.5%.

Mr Cairns said: “We have one of the highest VAT rates in Europe in respect of tourism yet, while other countries are considering and implementing reductions in the rate of VAT in this area, the UK’s VAT rate is set to increase.”

He is calling on the re-tabling of, and support for, an Early Day Motion (EDM) which urged the Government to consider reducing the VAT rate on accommodation and attractions in the UK.

“While many EDMs are not eventually debated, the more signatures that are obtained, and the more profile the campaign receives, the greater the prospect of change.

“This EDM has again brought to the fore the damage suffered by the UK tourism sector as a result of the comparatively high rate of VAT.

“While the motion has fallen, due to the end of the last Parliamentary session, we would encourage its renewal for the 2009/10 session, and for MPs to sign the EDM and highlight the need for a proper debate on this issue.”