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Martin took the opportunity to use Wetherspoon’s results for the half-year to 22 January 2017 to hit out at the “continuing tax disparity between supermarkets and pubs, in respect of VAT and business rates”, saying: “The biggest danger to the pub industry is the continuing tax disparity between supermarkets and pubs, in respect of VAT and business rates. “As previously indicated, we understand the need for the government to raise taxes. However, there should be a sensible rebalancing of the taxes paid by pubs and supermarkets, if the pub industry is to survive in the long term. “Last Wednesday’s budget was presented by the Chancellor as providing tax relief of approximately £1,000 per pub, for pubs with a rateable value of less than £100,000. “In fact, that sum is dwarfed by tax and regulatory increases. For example, costs to Wetherspoon will increase by approximately the following amounts in the next year: • Business rates: £7m • Electricity taxes: £4m • Excise duty: £7m

• Apprenticeship Levy: £2m “In addition, the proposed sugar tax will cost approximately £4m from April 2018 and there will be further electricity tax increases of around £5m by 2020. “Companies like Wetherspoon, on examination of the fine print of the budget, are not, in fact, eligible for the £1,000 per annum decrease in business rates, in any event. “The company has previously emphasised the far-higher taxes per meal or per pint that pubs pay compared to supermarkets. For example, supermarkets pay less than 2p per pint for business rates, whereas pubs pay around 18p per pint. “The increase in business rates per pint for pubs from next month will be around 2p, further exacerbating the tax gap. “Pubs also pay VAT of 20% in respect of food sales, but supermarkets pay almost nothing, enabling supermarkets to subsidise the price of alcoholic drinks. An article written for the trade press on this subject can be found below. “Wednesday’s budget will weigh far more heavily on pubs than supermarkets, especially since wage costs per pint or meal are approximately 10 times higher in pubs. “The Chancellor was less-than-frank in his budget speech, since he did not spell out the duty increases, giving the impression to many that there would be no increase. “In effect, this was a budget for dinner parties, no doubt the preference of the Chancellor and his predecessor – dinner parties will suffer far less from the taxes outlined above, whereas many people prefer to go to pubs, given the choice.”

Pubs Code Adjudicator Makes First Arbitration Awards PAUL NEWBY, the Pubs Code Adjudicator, has announced the completion of the first cases referred to the PCA for arbitration, indicating that the new framework is working to achieve fairness and choice for tenants. The first cases have been decided and the Adjudicator has made five awards. The numbers of awards will continue to rise as parties conclude their negotiations. Currently over half the accepted cases are at a stage where parties are agreeing procedure between themselves before the process reaches the final stages. Mr Newby said: This represents an early milestone for arbitration under the Pubs Code. The bulk of the first referrals for arbitrations were received in October and November and cases have been moving through the arbitration process. As part of arbitration, parties are encouraged to continue to negotiate and I am pleased to see this process is bringing pub-owning businesses and tenants to the negotiating table. In many cases this is leading to the narrowing of issues, a stronger negotiation position for tenants and swifter settlement. It shows that arbitration is fulfilling its purpose: tenants and pub-owning businesses are talking and coming to agreement between themselves. Arbitration awards remain private unless all parties to the dispute

agree to release details. As more cases reach award stage I will see where we can identify general principles and make information and advice available to tenants and pub-owning businesses to guide their future relationships. Some big issues such as what a Market Rent Only compliant tenancy looks like are in the arbitration process. All cases will be considered on an individual basis. The PCA has robust systems and resources in place to deal with the number of referrals we have received. My team and I are working very hard to progress all referrals. However, the parties in any dispute have significant control on timing because at each stage of arbitration both tenants and pub-owning businesses have to respond with information or views, or take action independently of the PCA, to allow the process to move forward. The Code is also new, and inevitably many of the issues raised are the first of a kind and take some time to resolve. Mr Newby added: I am also continuing to gather information from tenants, other individuals including MPs, and representative organisations about the Code. This information is beginning to build up and I am focusing on analysing the information so I have good intelligence to support action I will take. I urge any individual or organisation with information about potential Code breaches to bring that information to me. It will be treated in the fullest confidence.

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WETHERSPOON CHAIRMAN Tim Martin has hit out describing the Chancellors budget at one for “dinner parties” rather than the on-trade, as the pub group announced like-for-like sales growth of 3.3%.

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Tim Martin Hits Out At “Dinner Party Budget”

March 2017

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CLH News #198 March 2017  

Issue #198 of CLH News - the leading monthly trade publication for the independent hotel, pub and restaurant sector of the hospitality indus...

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