PUB CHAIN JD Wetherspoon has again used its financial update to criticise the tax burden borne by the industry.
Its main grievances are a VAT disparity between pubs and supermarkets, and what the company describes as “stealth taxes” such as the late-night levy and the increase in fruit and slot machine taxes.
It has previously used similar statements to attack the number of taxes imposed on pubs, which it calls “an unsustainable situation”.
According to Wetherspoon’s quarterly statement, the levy on fruit machines and late-night levies will cost it £2m apiece in taxes per annum, while excise duty brings that figure up to about £11m. The total tax bill the chain will pay for the current financial year is estimated to be around £500m; a £50m increase on the previous financial year.
The company’s operating margin in the first quarter was 8.6%, about 0.4% lower than the last financial year, due to “increases in costs in areas such as tax, utilities, labour and bar and food supplies, combined with increased marketing costs”.
Like-for-like sales increased by 7.1% and total sales increased by 11.1%, helped by a strong performance during the Olympic and Paralympic Games, although the business does not expect that upturn to be sustained.
“In spite of these challenges our sales, profit and cashflow remain resilient,” the report added.
The chain created some 3,000 jobs over the last financial year.
Wetherspoon’s – along with various other companies in the pub trade including Thwaites, Fuller’s and Shepherd Neame – have set up the ‘VAT Club’ with the aim of persuading the government to reduce tax in their industry. Such measures would generate jobs and better tax takes, it claims.
The current business rates system is over-complex and reform is needed, but reforms should focus first of all on simplifying the appeals process, particularly for businesses which are subject to business rates exemption
The CIoT has called on the government to rethink its approach to ensuring online sellers pay the correct amount of VAT.
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