Top London Chefs Look to Dubai and Beyond as UK Tax Burden Bites

Some of London's best-known restaurants are setting up branches in the Gulf, and one prominent restaurateur says the reason is a "tax tsunami" at home combined with a stronger work ethic abroad.

James Robson, co-owner of Fallow in St James's Market, has just signed a deal to open an outpost in the region. Fallow is regarded as the capital's hottest restaurant and serves 1,000 people a day. It rose to fame partly through Instagram, where it has 650,000 followers, and through eye-catching dishes such as a whole cod's head covered in a spicy butter sauce.

Fallow is not the first to make the move. Scott's of Mayfair, a celebrity hotspot, has opened in Dubai, as have the two Michelin-starred Indian restaurant Gymkhana and the upmarket Chinese venue Park Chinois. The Borough Market bakery Bread Ahead has also branched out there, while Isabel's, a Mayfair institution popular with politicians, has opened in Abu Dhabi.

The openings continue despite conflict in the Middle East. Earlier this year, the US-Israeli war in Iran left Dubai facing bombardment and prompted an exodus of expats. Some restaurants there are still struggling: Dinner by Heston has been temporarily closed since the fallout from the war. The Michelin guide was also criticised earlier this month for listing 16 restaurants that were permanently or temporarily closed, apparently because some inspections took place at the start of the year, before the war began.

Speaking from Hong Kong, where he is exploring opportunities in Asia, Robson named East Asia, the United States and the Gulf as key growth targets. "America champions business, the Gulf actively encourages and assists, whilst east Asia has a work ethic and taxation system that puts the UK to shame," he said.

Hospitality VAT is a central complaint. At 20%, the UK rate is among the highest in Europe, where the average for restaurants is about 12%. Italy charges 10% on food sold in restaurants. Chefs are urging Andy Burnham to cut the rate in next week's budget. Robson said the country had "sleepwalked into multiple anti-growth taxations" in the last two budgets and expects more next week. He also pointed to 25% corporation tax and dividend tax of 40% or more, and asked for VAT to be brought closer to European levels.

Michelin-starred chef Jason Atherton now spends a third of his time at his Dubai restaurant and says it is easier to make a profit abroad than in London. Robson said he does not resent paying UK tax and is proud to contribute to the country's deficit, but argued that UK growth no longer offers a sensible balance of risk and reward, so he is playing it safe at home and focusing overseas.

Human rights campaigners urge caution. Felix Jakens, Amnesty International UK's director of campaigns, said the UAE has a very poor record on workers' rights and protection from labour exploitation, and that its heavy spending on its UK image, not least through Manchester City, should not distract from how workers are treated.

Jakens said migrant workers, who make up the majority of the UAE's population, remain bound by a sponsorship system that ties them to their employers and exposes them to abuse. They 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 so kitchen staff are treated fairly, paid properly and able to raise concerns without fear of losing their job or visa.