A cross-border VAT gap is now under formal Westminster scrutiny, a genuinely constructive first step for hospitality businesses on both sides of the Irish border. The Northern Ireland Affairs Committee heard that food is taxed at 9% in the Republic of Ireland against 20% in Northern Ireland, while accommodation carries a 20% rate in Northern Ireland compared with 13% south of the border. For tax specialists advising hospitality clients island wide, this scrutiny offers a genuine opening to shape a fairer outcome for the sector going forward.

This attention deserves to be read as an opportunity for resolution rather than simply more pressure on already stretched businesses. Selina Horshi of the White Horse Hotel told MPs that for every £100 taken on accommodation, an equivalent hotel in the Republic retains £4.78 more through VAT alone, a gap that compounds quickly across a high volume, low margin business. The evidence points to three priorities for business advisory practices: the scale of the VAT differential itself, the sector pressure it is currently creating, and the advisory opportunity this parliamentary review now presents.

The sector level data underlines the real urgency of the situation. Figures from the Northern Ireland Statistics and Research Agency show hospitality jobs fell from around 57,000 to 55,000 over the course of 2025, a loss of roughly 2,000 positions in a single year. A Hospitality Ulster survey separately found 45% of hospitality businesses were unsure whether they would survive the next 12 months, a clear signal that timely advisory support matters now more than ever.

Additional cost pressures are compounding the VAT gap further. Michael Cadden of Hospitality Ulster told the committee that Brexit related food costs, higher national insurance contributions and a pricing ceiling shaped by local income levels are all squeezing margins from multiple directions at once. Unlike other parts of the UK, Northern Ireland has not yet received equivalent hospitality rates relief, adding further weight to the case for coordinated advisory attention across the sector.

Advisory firms and tax specialists can add real value to clients during this review period. Helping hospitality clients model their VAT exposure against Republic of Ireland competitors will clarify precisely where margin pressure is sharpest. Firms should also support clients in identifying any interim relief or support schemes as the committee's work continues over the coming months. Engaging directly with the policy process will help ensure client interests are properly represented in any eventual outcome.

The overall direction is genuinely encouraging for the finance sector supporting hospitality clients across the island of Ireland. With the VAT differential now formally under Westminster review, accountancy and advisory firms that engage early can help shape a more competitive, sustainable tax framework across the island.