Any readers below the age of say 40 might be amazed to hear that until not so many years ago, ’Budget Day’ was one of the most eagerly anticipated and busiest days in the petrol retailers’ calendar. It was typically preceded by weeks of speculation about how much extra fuel and tobacco to order, on the assumption that both were sure to rise by quite a considerable amount at 6pm or midnight on the day. There would be queues of cars forming on forecourts during the afternoon, and a complete crush at home time as punters took every opportunity to fill up before the dreaded price increases came into effect.
We’re all now becoming used to the Budget being quite low key. Many of the main points are leaked to the media beforehand, then maybe a little ’surprise’ is thrown in at the last minute just to give the papers something to write about the next day (Bingo, anyone?). Mr Osborne’s 2014 effort was very much the modern sort. Many of the key taxation changes are now programmed in through long-term measures, which were put in place several years ago. The most that any Chancellor needs to do today is to tinker with them from time to time. Take the Fuel Duty Escalator as an example. The legislation for this remains there, so while the rate has been ’frozen’ again in this Budget, the mechanism for re-activating automatic increases remains in the background.
Likewise the customary increase in tobacco duty. The escalator mechanism for this (2% above inflation) is long established, and the consequent 24p increase in the cost of a packet of 20 cigarettes from March 20 this year didn’t really require any sort of announcement from the government. In fact, the only ’news’ on that front was that the escalator has been extended to beyond the date of the next general election.
So there was little of positive impact in the 2014 Budget as far as the forecourt was concerned.
Cutting a penny off the duty on beer, while supposedly ’hailed’ by the brewing industry, is hardly going to make any difference to those forecourts with alcohol licences. Do you really expect to sell even a single extra can of lager as a result of this move? Tobacco price increases however ’routine’ these have become, and however laudable to the health lobby aren’t going to make life any easier for petrol retailers. It’s sometimes easy to forget that for the typical suburban or rural standalone petrol station, tobacco still represents between 30% and 40% of total shop sales. And there are still quite a few sites where the figure is over 50% yes, even in 2014. Or to put it another way, between 20% and 25% of the shop profits at many sites come from tobacco. There are hundreds (if not several thousand) of sites in this country run by commission operators for whom the shop profit is essentially the vast proportion of their entire profit. That may not be healthy (in any sense of the word), but it’s reality and those site operators have struggled to find any consistent stream of revenue to replace the evil weed.
One aspect of taxation where all retailers have been crying out for help, is business rates. But again, nothing changes as far as existing retail premises are concerned. With the government having previously deferred the next rating revaluation until 2017, business rates are still based on pre-crash 2008 rateable values. This means that most small businesses are being taxed on property values which don’t reflect what’s happened in the physical retailing environment since the middle of the last decade and it will stay that way for years.
Once again, it tends to be the longer-established sites that feel the most pain.
There is an aspect of modern-day Budgets which has developed surreptitiously over the past decade or so. This is the fact that many changes aren’t even announced by the Chancellor to Parliament or the media in the old-fashioned way. Instead, they are slipped in through the back door by various Statutory Instruments, and lurk hidden in the volumes of material published by the Treasury on Budget Day. Sure enough, there was (at least) one of those this March one that may prove very far reaching but has so far escaped much notice.
This involves the granting of powers to HMRC to directly access taxpayers’ bank accounts and seize any tax due. So far not very radical, however these powers now go beyond the stage of simply recovering tax that has been proven to be owed. In theory HMRC can now do the same for tax including VAT that is still being disputed. It means that they can hold on to the money while the tax payer has to prove that the tax isn’t due at all so much for due process such as having to obtain a court order or judgement before they can take anything. Of course, the government will pay you interest on what they’ve taken if you can prove that it wasn’t owed but here is another example of the slow-but-sure erosion of the principle of ’innocent-until-proven-guilty’. The taxpayer is presumed to be guilty unless they can prove otherwise.
We reported just a few months ago that HMRC had quietly been granted powers to examine retailers’ credit card transactions through the card acquirer networks; now they have the power to seize funds before proving that anything illegal has taken place.
Most of us who’ve ever dealt with individual HMRC employees in the course of our work have found them to be completely reasonable and polite human beings just trying to be fair to the taxpayer (the one they’re examining and the rest of us who pay taxes). But giving these sorts of powers to any authority without apparently any formal judicial oversight should worry everyone running any sort of business.
There were few real headlines from Budget 2014, but let’s not say that it didn’t contain anything of importance.