Publicans are but the taxman’s sidekicks

How naive of you to think that pubs are places to enjoy a beer. They are the taxman’s office away from the office and the publicans his assistants. This message was driven home by Tim Martin, who is Chairman of the 823-strong pub group JD Wetherspoon which he founded in 1979.

The tax disparity between supermarkets and pubs is creating a competitive disadvantage that is leading to the closure of many pubs, Mr Martin said on 9 September 2011.

Mr Martin renewed his attack on the "unsustainable" levies facing the pub industry after revealing his firm’s tax bill topped GBP 450 million (EUR 517 million) in the past financial year, or almost 10 times its post-tax profit of GBP 46.8 million.

While JD Wetherspoon reported record sales of GBP 1.07 billion (EUR 1.23 billion), up 7.6 percent for the year to 24 July 2011, pre-tax profits fell 6 percent to GBP 66.8 million (EUR 76.8 million) due to higher interest payments.

Operating margin, before exceptional items, decreased to 9.5 percent (2010: 10 percent), "mainly as a result of increases in bar and food costs, labour and utilities".

JD Wetherspoon opened 50 pubs in the period and said it intends to open a similar number in the current financial year.

That represents a significant investment as the average development cost for a new pub (excluding the cost of freeholds) has increased from GBP 860,000 to GBP 1.21 million (EUR 1.4 million) because JD Wetherspoon has had to convert more non-pub locations into pubs than previously.

On the matter of tax, JD Wetherspoon revealed that its GBP 453.1 million tax bill included GBP 204.8 million in VAT, GBP 120.2 million in excise duty, PAYE and National Insurance of GBP 65.2 million, property taxes of GBP 41.7 million and corporation tax of GBP 21.2 million.

So you still think that going down to the pub is all about beer?