JD Wetherspoon has criticised the government because it will have to increase the price of its meals when a recent reduction in the VAT on its food is phased out. Hot food served in pubs and restaurants typically has a VAT rate of 20%, although this has been reduced to 5% during the pandemic. Wetherspoons said plans to return VAT levels for hospitality food to previous levels shows “unfairness” compared with retail, where there is largely no VAT.
The company said:
“The interim rise to VAT of 12% in September 2021, will result in an increase to food prices by around 40pence per meal. The VAT rise will make the entire hospitality industry less attractive compared to the big supermarkets. For many years the UK’s governments have behaved like Monty Python’s Dennis Moore, who robbed the poor (in this case pubs and restaurants) to help the rich (supermarkets). Treating the same product (food) the same way for tax purposes makes economic sense.”
The criticism came as Wetherspoons said it will report a loss for the current financial year because sales are still well below pre-pandemic levels. Following the enforced hospitality closures the pub giant has now reopened 850 of its 860 sites.
The chain told shareholders that this sales decline has accelerated while the Euro 2020 tournament has been on. Since June 10 when the football tournament started, sales have fallen by more than 20% because in most cases the group’s pubs do not screen the games. The business also revealed that when sites were only able to reopen outside, compared to the same period in 2019 like-for-like bar and food sales were down a massive 49%.