Fallow Signs Gulf Deal as UK Tax Hikes Squeeze London Dining Margins

James Robson has signed a deal to open a Fallow outpost in the Gulf, joining a wave of London dining brands moving capital abroad.

The UK charges 20% value-added tax on hospitality, a rate that sits well above the European average of 12% for restaurants. Italy, by comparison, applies a 10% rate to food sold in eating establishments. Robson, who co-owns Fallow in St James's Market, described the domestic fiscal environment as a tax tsunami. He also pointed to a 25% corporation tax rate and dividend taxes of 40% or more, arguing that the country has sleepwalked into multiple anti-growth taxations over the last two budgets.

Robson, who is currently in Hong Kong scouting Asian opportunities, identifies the Gulf, the United States, and East Asia as primary growth targets. He noted that the Gulf actively encourages business, while East Asia offers a strong work ethic and a tax system that puts the UK to shame. Fallow itself serves 1,000 people daily and maintains a social media following of 650,000, having built a reputation for dishes such as a whole cod's head in spicy butter sauce.

The move follows several high-profile departures. Scott's of Mayfair, Gymkhana, Park Chinois, and Bread Ahead have all opened locations in Dubai. Isabel's, a venue known for hosting politicians, has expanded to Abu Dhabi. These openings proceed despite earlier this year's US-Israeli war in Iran, which caused an exodus of expats and temporarily closed venues like Dinner by Heston. The Michelin guide recently faced criticism for listing 16 closed restaurants, a result of inspections conducted before the conflict began.

Jason Atherton, a Michelin-starred chef, now spends one-third of his time at his Dubai restaurant, stating it is easier to make a profit there than in London. Robson said he does not resent paying UK taxes but believes the risk and reward balance no longer makes sense for domestic growth. He plans to play it safe at home while focusing his expansion efforts overseas.

Felix Jakens, director of campaigns at Amnesty International UK, urged caution regarding the labor practices in the region. He noted that the UAE has a poor record on workers' rights and that migrant workers, who form the majority of the population, remain tied to employers through a sponsorship system. Jakens argued that these workers are denied the right to form trade unions and face risks of abuse, a factor he said UK businesses must address through proper human rights due diligence.

Chefs are urging Chancellor Andy Burnham to reduce the VAT rate in next week's budget. Robson expects further tax changes in that announcement and hopes for a rate closer to European levels.