With 64% of businesses citing the tax burden as a growing challenge in ICAEW’s most recent Business Confidence Monitor, the Institute said that doing business was too complicated, too expensive and too uncertain, with the hospitality sector in particular feeling the challenges.

However, ICAEW said that if the government intended to press ahead with plans for a visitor levy in England, it should legislate for a statutory national model scheme to avoid a patchwork of rules that burdens businesses, adds more cost and complexity and delays revenue collection.

Visitor levies are an established feature of modern tax systems in major tourist hot-spots, including in Scotland and Wales from later this year, but with businesses already operating under significant pressures, it was important any new levy is designed and implemented with care, ICAEW said.

In its response to a consultation on the introduction of a levy in England, the Institute said that a consistent national structure was essential to ensure that accommodation providers, digital platforms and local authorities can implement the visitor levy efficiently. After a set notice period, local leaders would be able to adopt this national model, while a full consultation would be required if unique local circumstances warrant divergence from the national model.

To ensure clarity, fairness and administrative simplicity, ICAEW recommended that, if introduced, the visitor levy in England should have:

• a flat-rate levy per night, which offers greater transparency and avoids complex apportionment of package prices;
• nationally defined exemptions only, to avoid creating a postcode lottery of tax rules through regional inconsistencies and compliance burdens;
• a 28-night national cap to align with existing VAT rules regarding long-stay accommodation;
• a minimum 12 month notice period to implementation with “grandfathering” to allow for existing advance bookings;
• a centralised collection model where the levy is paid via a national portal and then distributed to the relevant local authorities.

Ed Saltmarsh, ICAEW Technical Manager for VAT and Customs, said:

“Our members tell us that doing business is too complicated, too expensive and too uncertain, and the introduction of another tax will add to the burden that hospitality firms are already under.

“If government does want to press ahead with these plans, rather than requiring local authorities in England to design their own visitor levies from scratch we’re urging consistency by legislating for a national model scheme to reduce administrative costs and ensure this is not another burden for business.”

The consultation, from the Ministry of Housing, Communities and Local Government and HM Treasury, considered the design and implementation of the visitor levy across devolved authorities. Under the new proposals, the mayor of each of strategic authority will be given the power to create local overnight visitor levies which will apply to all commercially-let visitor accommodation.