Top Chefs' VAT Cut Plea Backed by Data: 83,396 UK Hospitality Firms Face Mounting Pressure

Four of Britain's most prominent chefs have united in calling for the government to halve VAT for pubs and restaurants to 10%, as new data from the CompanyPulse company register^[1] reveals the scale of financial pressure facing the UK hospitality sector. The plea from Tom Kerridge, Yotam Ottolenghi, Ravneet Gill and Simon Rogan comes as 109,659 UK companies across all sectors currently sit in liquidation proceedings^[1].

The 20% VAT Burden

The chefs told BBC Newsnight^[2] on 29 May 2026 that working in the hospitality industry was the "hardest it has ever been". The UK's standard VAT rate of 20% applies to hospitality businesses, making it the second highest in Europe behind Denmark, according to industry body UK Hospitality^[2].

"We're not making any money whatsoever, and we're just keeping our heads above water," warned Simon Rogan^[2], while Tom Kerridge said the government was getting taxation on businesses "very, very wrong"^[2]. Ottolenghi, who operates 11 restaurants, cafes and delis, described the situation as "crippling" not just for his own business, but for others running bakeries, cafes, and pubs^[2].

The UK's 20% VAT rate stands in stark contrast to rates across Europe: Germany (7%), Ireland (9%), France (10%), Italy (10%) and Spain (10%)^[2]. "Every pound that we take, a substantial amount of it just goes to the government for a different taxation," Ottolenghi explained^[2].

Scale of the Crisis in Numbers

CompanyPulse data provides a stark picture of the hospitality sector's health. The database shows 83,396 active take-away food shops and mobile food stands operating across the UK^[1] - the highest category within hospitality-related SIC codes. This represents just a fraction of the broader food service industry.

The insolvency statistics paint a particularly concerning picture. Of all UK companies that have entered insolvency proceedings, 109,659 are currently in liquidation, with an additional 5,020 in administration, 3,580 in voluntary arrangements, and 642 in receivership^[1]. While this data covers all sectors, UK Hospitality reports that three hospitality businesses have gone under every day since the start of 2026^[2].

Regional Impact and Business Formation Trends

London dominates the UK's business landscape with 1,058,368 companies, followed by Manchester (102,637), Birmingham (92,851), and Glasgow (70,994)^[1]. These urban centres, traditionally home to vibrant hospitality sectors, are likely bearing the brunt of the current crisis.

Daily incorporation data from May 2026 shows significant volatility in new company formations. While some days saw over 4,000 new companies registered - such as 4,192 on 5 May 2026 - other days saw dramatic drops, including just one incorporation on 31 July 2026^[1]. The erratic pattern suggests uncertainty in the business environment, with potential entrepreneurs perhaps hesitating to launch new ventures.

Government Response and Industry Pressure

Cabinet minister Pat McFadden acknowledged that the government had "asked business to contribute more", adding "we help them where we can"^[2]. He noted that the government was lobbied about tax cuts "all the time", but emphasised there was a cost attached to such measures^[2].

"The chancellor has to make these decisions in the round, netting off all of these demands against the increasing expenditure demands that government also faces by people every day saying 'why can't you spend more on this or this'," McFadden stated^[2].

Looking Ahead: Sector Sustainability

The hospitality industry's struggles follow years of challenges, from the Covid pandemic's trading halt to soaring energy prices driven by the war in Ukraine^[2]. While pandemic-era support measures like Eat Out to Help Out and temporary VAT relief provided some respite, the sector continues to face significant headwinds^[2].

With the UK maintaining one of Europe's highest VAT rates for hospitality and daily business closures continuing, the sector's calls for tax reform are likely to intensify. The data suggests that without intervention, the UK's hospitality landscape could see further consolidation, potentially altering the character of Britain's high streets and dining culture for years to come.