Restaurant Expansion: UK Tax Rates Drive Chefs to the Gulf

The UK's high VAT rate for hospitality is causing top London chefs to open new restaurants overseas. James Robson, co-owner of Fallow in St James's Market, has signed a deal to open a branch in the Gulf. He attributes the move to a "tax tsunami" at home and a stronger work ethic abroad.

Fallow, which serves 1,000 people a day and has 650,000 Instagram followers, is not alone. Scott's of Mayfair, Gymkhana, and Park Chinois have all opened locations in Dubai. Bread Ahead has also expanded there, and Isabel's has opened in Abu Dhabi. These moves are happening despite regional conflict that has affected some businesses in the area.

The UK's hospitality VAT is 20%, which is significantly higher than the European average of about 12%. Chefs are calling for a reduction in this rate. Robson has criticized "multiple anti-growth taxations" from recent budgets and pointed to a 25% corporation tax and dividend taxes of 40% or more. He is seeking VAT rates closer to European levels.

Some chefs say it is easier to make a profit abroad. Jason Atherton now spends a third of his time at his Dubai restaurant. Robson stated he does not resent paying UK tax but argued that UK growth no longer offers a sensible balance of risk and reward, so he is focusing on opportunities overseas.

Human rights groups are urging caution for businesses expanding to the region. Felix Jakens of Amnesty International UK said the UAE has a poor record on workers' rights. He noted that migrant workers, who make up the majority of the UAE's population, are bound by a sponsorship system that can expose them to abuse.

Jakens also stated that these workers are denied the right to form trade unions. He said any UK business expanding into the Gulf must carry out proper human rights due diligence to ensure staff are treated fairly, paid properly, and able to raise concerns without fear of losing their job or visa.