Baby Ace: Equal tax treatment hope flagged by pubs firm JD Wetherspoon as its profits rise

Friday, March 14, 2014

Equal tax treatment hope flagged by pubs firm JD Wetherspoon as its profits rise

By

Rob Davies

Pubs chain JD Wetherspoon said it was hopeful of winning its battle to be treated equally with supermarkets on tax, as it reported rising profits.

Pre-tax profits for the first six months of the year were up by 3.2 per cent to £36million, on sales that grew by 9 per cent to reach £683.2million.

Despite the strong performance, the firm said it was still hobbled by the ‘disparity’ between the tax it pays and the less onerous demands placed on supermarkets.

Pubs up: Recent trading has been strong, with sales in the six weeks to 9 March up 6.7 per cent on an underlying basis

While pubs pay 20 per cent VAT on food sales, supermarkets pay nothing at all, allowing them to use the saving to slash the price of alcohol.

Wetherspoons also pointed out that pubs pay business rates equivalent to 15p per pint, with supermarkets paying a maximum of 2p.

The company said ‘it does not make social or economic sense for the tax régime to favour supermarkets’.

But chairman Tim Martin said he believed Westminster was coming round to the pub chain’s way of thinking.

He said: ‘There is a growing realisation among politicians, the media and the public that a level tax playing field will create more jobs and taxes for the country’.

Nonetheless, Wetherspoons expects its tax costs to rise, pointing to the government’s new slot machine taxes and ‘late-night levy’, which it said the government had imposed ‘without realising the consequences of its actions’.

And the company warned that beating last year’s second half performance, given the extra tax burden, may proved ‘difficult’.

Wetherspoon shares fell more than 1.0 per cent in early afternoon trade, down 8.75p to 819.75p on the fragile outlook.

But recent trading has been strong, with sales in the six weeks to 9 March up 6.7 per cent on an underlying basis.

Wetherspoons, which has some 900 pubs, plans to cut the ribbon on its first pubs in the Republic of Ireland in 2014. And it expects to open up to 50 new pubs in the UK this year.