'Pubs will suffer from VAT rise'

Many pubs will suffer as a result of poor planning ahead of the VAT rise in January — that's the warning from one trade business mentor.

David Hunter of the Bowden Group, who has advised pubs, restaurants and hotels for over 20 years, warned that some licensees struggle to get to grips with the figures or feel bad about raising prices.

VAT is set to rise from 17.5% to 20% on 1 January.

"As I go about my business I regularly meet people who feel that increasing their prices by a penny or two appears mean in the eyes of customers so they simply do not do it," he said.

"That might work one year, but if they adopt the same attitude year on year it will chip away at the profits and make their business unsustainable."

Coupled with this lack of desire, Hunter believes there is also a lack of understanding: "This is going to sound harsh but I regularly meet proprietors who have difficulties with figures.

"It goes without saying therefore that the figures and percentages involved in tax, particularly VAT increases may be challenging for them."

To help out licensees, Hunter has added a free calculator to help on his blog www.hunterbowden.co.uk/blog/​.

He added: "I know some people will say that this calculator is patronising and they are all capable of dividing by one figure and multiplying by another.

"But that doesn't take into account every individual — such as those people who maintain their success by being great hosts rather than financial managers. For them, such a simple formula is ideal."