Springfords LLP blog

Some news, views and comments about everything and anything, relevant and irreverent.

Tax inequality

21 October 2014

The hospitality industry is looking to bridge the tax gap between themselves and retailers.  They’re trying to cross the divide between prepared and prepacked food.  The local pub is at stake.

It’s the fiftieth anniversary of the Forth Road Bridge.  Back in the sixties, not long after the bridge opened, southbound passengers and drivers would often share a joke as they spied the long-since demolished bonded warehouse on the edge of South Queensferry.  “What’s the Pope’s telephone number?”  “VAT 69!”  So said the big black sign on the Queensferry blenders.  Much laughter would then rock the state of the motoring art Vauxhall Viva, until the frantic search for change for the toll booth.  No matter how many crossings had been made, the toll money was never ready.

Almost everything has changed since then.  The Pope’s telephone number.  The Pope (several times). The Viva has rusted away (as was the Forth Road Bridge for a while).  The tolls are gone and so has the bonded warehouse.  One thing remains.  VAT.  Everything has come to pass, but it’s the levy of value added tax that has Tim Martin, the chairman of pub chain JD Wetherspoon, up in arms.

Back in 1964, tiny Tim Martin (as he was back then) probably didn’t worry too much about the tax regime and how it affects the licensed trade.  That’s all changed, now that he’s all grown up and not driving a Viva these days.

Tim’s ire is raised by what he’s called the  tax “inequality” between pubs and supermarkets with regard to VAT and business rates, and this he believes is a major threat to the pub industry.  He argues that it’s just not fair to charge more VAT on food that’s cooked in his kitchens, than the amount charged on food on the grocer’s shelves. 

Differing rates of VAT charged on food and … food … is the main reason for pub closures, argues Mr Martin.  We think there may be other reasons as well, but that’s not an argument for here.  In late September, his chain funded a 7.5% cut in VAT for a day, to highlight the benefit of a VAT reduction for the hospitality industry.  It was part of Tax Equality Day - a day of action to highlight tax inequality.

Whether Wetherspoons, or whether Waitrose is not the issue.  Not the issue for us, anyway - although we’ll more happily have a chat about tax rates in the local pub than in the freezer aisle at the supermarket. 

Whether you agree with Tim Martin or not, we’re all agreed that taxing matters are not going away.  Getting your affairs in order are everybody’s great divide.  Let’s toast that, shall we?  Anyone seen the VAT 69? 

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