£500m tax bill to see JD Wetherspoon slow the pace of new pub openings

The chain is on track to open 40 pubs in the year to July 29 but expects this figure to slow to between 20 and 30 new sites in the following financial year.

It renewed its attack on cost pressures from Government legislation, including recent increases in excise duty, business rates and carbon tax, and said its total tax bill in the current financial year will be around £500m.

In a statement, Wetherspoons said yesterday: “We have created approximately 3,000 jobs in the same period, but all of the economic benefits of our expansion are currently being levied by the Government as taxes – an unsustainable situation.”

The chain is particularly unhappy that pubs have to pay 20 per cent VAT on food sales while supermarkets pay “virtually nothing”.

It added in a trading update: “The overall level of taxes and the disparity with supermarkets have greater economic effect in less affluent parts of the UK.

“The result is that the majority of prominent pub and catering companies are investing in the southern part of the UK and in major town and city centres elsewhere, contributing to serious economic problems for many high streets in Britain and Northern Ireland.”

The company, which has around 850 pubs, said like-for-like sales in the 13 weeks to April 22 were up by two per cent, compared with a decline of 0.7 per cent in the six weeks to March 4. Continuing cost pressures resulted in a deterioration in its operating margin but this should improve in the current quarter.

It added: “We continue to be slightly more cautious about the potential outcome for the current financial year.”

The company has around 50 pubs in Yorkshire. In March, chairman Tim Martin said the group’s Yorkshire pubs had held up well despite the downturn.