Thousands of outlets expected to take part in Tax Equality Day

By Ellie Bothwell contact

- Last updated on GMT

Related tags: Alcoholic beverage, Public house

Eight pub companies have so far pledged to support the day on 24 September
Eight pub companies have so far pledged to support the day on 24 September
Around 15,000 outlets are expected to reduce their prices on Tax Equality Day in September, to show the benefits of a VAT cut for the hospitality sector.

So far eight pub companies have pledged to support the national day of action on 24 September, which involves lowering prices on food and drink by 7.5% for the day to simulate a cut in VAT to 5%.

These include JD Wetherspoon, St Austell, Fuller’s, Punch Taverns, Charles Wells, Whiting and Hammond and Shepherd Neame. Wadworth's managed estate is the latest to join the campaign.

At present all food and drink in pubs is subject to 20% VAT, compared to supermarkets which benefit from a zero VAT rate.

A spokesman for Jacques Borel’s VAT Club, which has spearheaded the day, said “many more” pub companies are set to confirm their support throughout August and September.

He added that it is expected at least 15,000 outlets will take part in the day – the same number it is thought engaged in the first Tax Parity Day last September. The name changed to Tax Equality Day earlier this year following suggestions by campaign members to help improve trade and consumer understanding of the cause.

He also announced that London-based gastropub operator Renaissance Pubs is the latest to join the VAT Club. The company operates seven sites across the capital.

Related topics: Legislation

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Cheap alcohol to drive footfall - right or wrong?

Posted by Graham Bell,

I think irresponsible, and unfair, contributing to higher food prices for all, drinkers (I am), or not (children included).

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We've been here before.

Posted by Inerested Observer,

Perhaps the easiest way to explain the VAT issue is to suppose that the bottle of beer or whatever is bought in Q1 but not sold until Q2.

In that case the entire 20p is refunded in Q1. The Chancellor has nothing, because no retail sale has taken place.

In Q2 the beer is sold and 18p is remitted to the Chancellor - that's his take out of the sale whatever the purchase price was, and whether a profit or loss was made.

Tesco etc sell some alcohol at a loss (if indeed they do) to feed footfall and make more profit overall than they would have otherwise. Profits, and corporation tax, go up as a result.

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VAT Input Tax > VAT Output Tax = Refund

Posted by Graham Bell,

Buy at £1.20 input VAT = 20p
Sell at £1.08 output VAT = 18p
VAT refund due = 2p

What sense does selling at a loss make?

Supermarkets supply most of our zero rated essentials, which can be increased in price with no revenue due to HMRC.

If wrong I will stand corrected.

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