Wetherspoons has hit out at the government for what is believes are unfair VAT rates on hospitality businesses, which could make the sector less competitive post-Covid.
The pub chain has accused the government of “unfairness” and of ‘robbing the poor to help the rich’ by levying a higher VAT rate on food bought in pub and restaurants than on food bought in supermarkets.
Under normal circumstances, supermarkets pay zero VAT on food, but pubs and restaurants pay 20 per cent.
The Chancellor reduced VAT on food for the hospitality industry to five per cent last year to assist businesses through the pandemic, however it is now proposed that rates return to 20 per cent in stages in the next year.
The chain said the interim rise to 12.5 per cent in September will mean Wetherspoons has to increase food prices by around 40 per cent per meal, making “the entire hospitality industry less competitive vis a vis powerful supermarkets”.
Tesco, Sainsbury’s and Morrisons made pre-tax profits of £2.361bn in 2019, compared with Michells and Butlers, Greene King and Wetherspoon’s £647m the same year.
“For many years, UK governments have therefore behaved like Monty Python’s Dennis Moore – who robbed the poor (in this case pubs and restaurants) to help the rich (supermarkets),” Wetherspoons said in a market update this morning, adding: “Treating the same product – food – the same way for tax purposes makes economic sense.”
HMRC has been contacted for comment.
Decision not to show football ‘hampered recovery’
Wetherspoons said this morning it expects to make a loss for the financial year ending 25 July.
As at 4 July, 850 ‘Spoons pubs were open out of a total 860, with most pubs closed at airports.
The pub chain has not televised the Euro 2020 matches, aside from “a limited number of exceptions for individual matches”.
Interactive investor head of markets Richard Hunter said Spoons’ recovery had been hampered by its decision not to show the football.
“Wetherspoon’s tentative sales recovery has been slightly derailed by its decision to maintain its historic stance on, for the most part, refusing to televise football matches,” Hunter said.
“This has led to some investors questioning the wisdom of its position, as the travel of direction had been improving.
“In numbers comparing with two years ago, sales were down 49 per cent after the initial lockdown easing in April, 15 per cent after pubs were fully open between May and July, and just 8.1 per cent between May and the start of the Euro 2020 tournament.
“However, in the weeks which the Euros have been live, sales have dipped again, down 20.8 per cent.