One week to implement VAT changes is not enough

28th November 2008, 12:41pm

The Association of Licensed Multiple Retailers (ALMR) has said that one week is not enough for pub and bar owners to implement the VAT changes announced by the government in Monday's pre-budget report.

ALMR members have this week reported of their frenzied efforts to ensure that they comply with the Treasury's deadline.

The 1st December switch has meant that pub and bar operators, whose premises are usually open seven days a week, have had in effect had just six days to reconfigure their VAT related operations - for the first time in 17 years.

New research from ALMR shows that its members will be expecting to pay some £570 per pub just to re-print menus and re-programme tills.

Extended across the UK pub industry, which includes pubs of all range and sizes, this means that Britain's pub industry could be forking out anywhere between £10 and £36 million just to make this year's changes alone.

Chief Executive Nick Bish comments: "Publicans up and down the country have faced a week of chaos just because it has been decided that the 1st December is a nice neat date to implement the changes.

"Most pubs and bars operate on a Sunday thru Saturday basis, whilst the support businesses that they rely upon to make the changes necessary will shut up shop at 5pm on Friday. This means that licensees will be particularly affected by Darling's December disarray.

"The high street shops are offering 20% and 40% discounts and are struggling, so it's hard to see how a measly 2.5% change will bring more customers through our doors, and yet publicans are still going to have fork out to implement these changes. The biggest irony is whilst they have to re-configure their tills and reprint their menus they will be practically the only group who won't benefit from Alistair Darling's tinkering with VAT; the alcohol duty rise will swallow up any customer benefit." 

Alex Salussola, Chairman of Glendola Leisure, owner of the famous Rainforest Café chain, and ALMR President adds: "This Government may be happy to make policy off the cuff, but it's us who have deal with the fallout. The simple fact is that we need to completely revisit the way our operations work - and we have less than a week to do it. We haven't even had time to work out all the ramifications and all the changes we need to make, let alone fully account for the cost implications.

"It's not just a matter of ordering new materials; every single one of our business elements needs to be re-programmed. There seems to be a complete lack of understanding from Whitehall not only about the practical changes that need to be made, but also the time needed for publicans to understand the cost implications and fit them into the business planning."

Paul Wigham, Chief Executive of The Bar Group, comments: "The situation is a complete and total mess. This is the worst example of policy on the hoof. We know our industry and we know what makes our customers tick. There is no beneficial effect anywhere as far as I can see - not enough is being given back to stimulate demand and now a pile of extra costs have been thrown in. The cost of re-printing menus and re-engineering tills alone will more than offset the reduction in VAT. This is a disaster for the industry. You need to watch the market over the next month."

ALMR member and South London operator GC Mallen adds: "This is a lot of hassle and grief for small change, but if I don't reduce my prices by 2.5%, how much goodwill will I lose? My turnover is down; I've had to lay off staff. I used to pay a considerable sum in taxation, now I won't. How much is all this interference and increased taxation really costing the government?"

Related Articles:

• 09 Dec 2009 - The VAT increase will add six pence to the price of a pint of beer

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