The Government’s decision to end the zero rate of VAT on personal protective equipment (PPE) has been slammed by wholesale leaders.
Responding to The Treasury’s confirmation that the domestic VAT zero rate for PPE will end on 31 October, Bestway Wholesale’s managing director Dawood Pervez said that it is a potentially dangerous move that will be of considerable concern to retailers and the general public.
“Right now there is a significant amount of PPE stock in the market as retailers and wholesalers have built up stocks in advance of winter and increasing COVID-19 infections.
“An increase of 20% [on the price of PPE] is a significant amount, and it is a surprising move if we all wish to keep safe and control the pandemic. There is little doubt that increases in price will slow demand and act as a barrier to buy PPE for some, at a time when many peoples’ income has been reduced due to the pandemic, and every penny in their shopping basket counts.”
Andy Kemp, group sales & marketing director of Bidfood, commented: “Ending the zero VAT rate on PPE at the end of this month gives hospitality and wholesale businesses very little notice, and places a huge burden on a sector which is already seeing incredible challenges and cost pressures from COVID-19 measures.
“It is a real and unnecessary blow to businesses that have been working so hard to create COVID-19 secure environments that the public are happy to eat in, and we would question the timing as the country equips itself to face a second wave.”
James Bielby, chief executive of the Federation of Wholesale Distributors, added: “There couldn’t be a worse time to inflict extra costs on the food supply chain. Wholesalers have been trading at a loss for months because of the restrictions on their hospitality customers. Some of them have lost 80% of their business and are struggling to maintain their contracts to schools, hospitals and care homes.
“To burden them with a 20% increase in the price of equipment that they rely on to carry out their operations is kicking them when they are down and it will only increase the existing risk to food distribution to vulnerable groups.
“The reasons for introducing a zero rate haven’t changed, and we face months of further COVID-19 measures. It’s disappointing that the zero rate isn’t being continued for as long as COVID restrictions on trade are in place.”
Health and social care providers are now able to source PPE via a government portal designed for the purpose, but private-sector businesses in the wholesale and retail sectors, as well as ordinary consumers, cannot. The Treasury is advising firms to reclaim the VAT on PPE as a business expense.