JDW nets £14.9m machine tax refund

By Ewan Turney

- Last updated on GMT

Related tags Pub operator jd Operator jd wetherspoon Tax refund Tax

Wetherspoon: money back from VAT man
Wetherspoon: money back from VAT man
Managed pub operator JD Wetherspoon has claimed back £14.9m in overpaid VAT on gaming machines in its pubs. The money has been claimed back from HM...

Managed pub operator JD Wetherspoon has claimed back £14.9m in overpaid VAT on gaming machines in its pubs.

The money has been claimed back from HM Revenue & Customs after a High Court judge ruled in a separate case last year that charging VAT on some machines — including category C AWP machines used in pubs — and not others, broke EU competition law (Hope for pub AWP tax windfall​).

There are about 1,000 claims from pubs outstanding for the period between 2002-05, worth about £500m to the sector.

"As part of a continuing legal process, the Company has recently received a cash payment of £14.9m for a claim against overpayment of VAT on amusement machines," said Wetherspoon.

"This potential income is still contingent on the final outcome of that legal process. A further update will be made, when appropriate."

Keith Down, finance director at JD Wetherspoon, said he thought the company was the first in the pub sector to get a refund.

"We might be able to claim another million or two but we've done a lot of work to get the claim settled," he said.

"It is subject to appeal — HRMC is to appeal this to Europe and that's not likely to be heard until 2012.

"At worst we'll have the money in our bank account for a while — but we're hopeful that the appeal won't be successful."

Down said Wetherspoon has lodged its claim for a refund two or three years ago and the £14.9m payment was net of the costs of pursuing.

Slightly cautious

The news comes as Wetherspoon said it was "slightly more cautious" about the year ahead due to the recent duty and tax increases, high interest charges and subdued consumer expenditure.

It announced a 0.8% drop in like-for-like sales for the 13 weeks to 25 April on last year. Total sales are up 3.6% for the quarter.

For the year to date (39 weeks to 25 April), like-for-likes are down 0.2% and overall company sales up 4%. Operating margins before exceptionals have remained at 10%.

JDW expects to open 45 pubs this financial year, having already opened 26 new pubs and closing two.

"We continue to believe there are substantial opportunities for us to acquire sites at reasonable prices," it said.

Having secured a new banking facility at the half-year point, the company said it was in a sound financial position, with net debt to ebitda currently approximately 2.8 times.

"Our sales, profit and cash-flow continue to be resilient, in spite of price increases in January (in respect of higher VAT) and at the end of March (in respect of a punitive increase in excise duty for pubs)," it said.

"However, we now feel slightly more cautious about the outlook for the next financial year, as a result of the annualised effect of recent tax and duty increases, and higher interest charges, combined with the risk of more subdued consumer expenditure."

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