Pubs giant JD Wetherspoon has kept up its attack on the “excessive” levies paid by the industry after revealing it handed more than £600 million to the taxman over the last year.
Although chairman Tim Martin said the firm was “happy to pay” its share of tax, he said the pub industry has lost about 50 per cent of its beer sales to supermarkets since the rate of VAT was raised from 8 per cent more than 30 years ago.
Martin said: “Supermarkets pay virtually no VAT in respect of food sales, whereas pubs pay 20 per cent, and this disparity enables supermarkets to subsidise their alcoholic drinks sales to the detriment of pubs and, indeed, restaurants. This serious economic disadvantage has contributed to the closure of many thousands of pubs.”
His comments came as Wetherspoon said its tax bill rose by £48.7m to £600.2m in the year to 27 July – the equivalent of £662,000 per pub. Pre-tax profits before one-off items grew 3.1 per cent to £79.4m, ahead of City forecasts, on sales 10 per cent higher at £1.4 billion.
Greg Johnson, analyst at Shore Capital, said: “The better-than-expected performance was driven by slightly higher operating profit and a lower interest charge.”
Revenues at the group, which ended the financial year with 927 pubs, were lifted by a 5.5 per cent rise in like-for-like sales and the opening of 46 venues over the past 12 months.
Current trading has remained encouraging, with like-for-like sales growing by 6.3 per cent in the six weeks to Sunday, and shares in the firm ended the day up 8p, or 1 per cent, at 770p.
Martin, who founded the business in 1979 and became chairman four years later, said: “We currently intend to open around 30 to 40 pubs in the year ending July 2015.”
The company increased its headcount by more than 3,000 to 34,000 last year and paid £29.2m in bonuses and free shares to employees, the majority of whom work in its pubs.
Wetherspoon said yesterday that it would be supporting Jacques Borel’s “Tax Equality Day” on 24 September, when the industry will cut prices by about 7.5 per cent to reflect the likely reduction in prices that consumers would see if VAT in pubs was brought down.
Martin also took aim at the demands of corporate governance “best practice”, which he said created boards that tend to be “excessively influenced by City fashions, creating instability and poor performance as a result”.
He claimed that “compliant” companies, with an independent non-executive chairman and dominated by non-executive directors, often fared “disastrously” in comparison with non-compliant ones.
“The road to hell in pub companies lies in emphasising the views of shareholders over those of employees on the front line,” said Martin, left.
Wetherspoon’s board proposed a final dividend of 8p a share, to be paid on 27 November, unchanged from last year. That would keep the total payout steady at 12p.