The British Hospitality Association (BHA) has underlined concerns that high levels of VAT on UK tourism businesses is acting as a deterrent to visitors and 'staycationers'.

In its annual report published on 6 June, the organisation said that the rate of VAT is having a negative effect on the Prime Minister's ambition to boost domestic tourism to 50 per cent. According to the document, "the present level of VAT in the UK is one of the most pressing issues facing the industry today, making UK tourism uncompetitive with most European competitor countries."

Research commissioned by Bourne Leisure and Merlin Entertainments and undertaken by Deloitte will be used to help lobby the government to reduce VAT on hotel accommodation. Meanwhile, the BHA will also compile a study to look into the potential effect of a reduction in VAT on the restaurants and eating out sector.

Elsewhere in the report, the BHA has called for support for the tourism industry through the Regional Growth Fund after VisitEngland's bid for £29m was rejected. The report said: "Time is thus being lost to international competitors who will grab the opportunity to gain market share by encouraging overseas those British residents who might otherwise have holidayed at home."