Vat cut 'unlikely to reduce' level of hospitality closures

Between January and March this year, there have been 213 corporate insolvency appointments — a  3% rise compared to last year

James Anderson of Deloitte Ireland said 'businesses in this sector are struggling with legacy debt issues, difficulty attracting and retaining staff, and high costs, in particular for energy'. 

Insolvencies in the hospitality sector declined during the first three months of the year by 27%, but the sector is expected to still experience a high level of closures this year and the Vat rate cut in July is “unlikely to reduce” them, a report from Deloitte has said.

Between January and March this year, there have been 213 corporate insolvency appointments — an increase of 3% compared to last year. 

There were 88 insolvencies recorded in the wide-ranging services sector. Within the services sector, financial services accounted for 29 insolvencies with holding companies accounting for 17.

Deloitte said there are early indications that there were 30 retail sector insolvencies during the first quarter of the year.

The hospitality sector has seen insolvencies decrease by 27% during the first quarter of this year to 24 compared to the same period last year.

However, Deloitte is still expecting the sector to continue to experience a high proportion of insolvencies for the remainder of 2026 despite the rate of Vat on food-led businesses being cut in July.

Turnaround and restructuring partner at Deloitte Ireland, James Anderson, said he expects “the hospitality sector will continue to experience a high proportion of insolvencies throughout 2026”.

“Businesses in this sector are struggling with legacy debt issues, difficulty attracting and retaining staff, and high costs, in particular for energy. A Vat rate cut is unlikely to reduce insolvencies in this sector,” he said.

The remainder of insolvencies were spread amongst construction, 20, IT, 18, manufacturing and agriculture, 13, other, nine, transport. seven, and wholesale, four.

Of all insolvencies during the first quarter, creditors’ voluntary liquidations (CVL) accounted for 70% which is up 16% year-on-year but a return to natural levels of company-led closures, according to Deloitte. The average age of the companies that entered a CVL was 14 years.

There were 30 court liquidations with Revenue listed as the petitioner in half of those cases. There were 25 receiverships recorded as well. This activity is back in line with levels seen in the first quarter of 2024.

In addition, there were four examinership appointments and five Small Company Administrative Rescue Process (SCARP) appointments during the first quarter of this year.