Burberry hands back millions in tax relief: Fashion giant is first non-essential retailer to repay business rates – piling pressure on other big firms
- The move will make London-based Burberry the first ‘non-essential’ retailer to hand over tax on business premises forced to close under lockdown rules
- Until now, only a few firms that have traded throughout lockdown have given up the business rates tax relief available to all retail and hospitality companies
- Other chains that have remained open will now come under mounting pressure to follow the luxury retailer’s example
Luxury goods giant Burberry will voluntarily pay the Treasury tax it saved from an emergency business rates holiday – even though its stores remain shut.
The surprise move will make London-based Burberry the first ‘non-essential’ retailer to hand over tax on business premises forced to close under lockdown rules.
Until now, only a few firms that have traded throughout lockdown, including supermarkets Tesco and Sainsbury’s, have given up the business rates tax relief available to all retail and hospitality companies.
Surprise: The move will make London-based Burberry the first ‘non-essential’ retailer to hand over tax on business premises forced to close under lockdown rules
Other chains that have remained open will now come under mounting pressure to follow the luxury retailer’s example.
In recent days Burberry has also paid back a £300million taxpayer-backed loan a month early, suggesting that it has growing confidence in Britain’s economic recovery and its own prospects in the year ahead. The company said settling the loan early and opting to pay business rates – despite Chancellor Rishi Sunak’s 12-month relief package announced last March – was ‘the right thing to do’.
Burberry also declined to accept Government furlough money last year.
The loan was part of a Treasury-backed assistance package for large firms buffeted by the pandemic. About 50 firms still have more than £12billion in Bank of England loans outstanding under the Covid Corporate Financing Facility – including a string of overseas companies.
Burberry’s London store has one of the highest rates bills in the country. It will hand over an estimated £6million for its six standalone stores and three outlet locations despite the 12-month business rates exemption for retail and hospitality until April.
The plan makes Burberry, famous for its tartan check, the highest profile retail operator outside the grocery and DIY sectors to return the rates money.
Analysis by Altus Group shows 14 retail groups have returned £2.2billion to the Treasury.
Joinery chain Howdens repaid £8million in November alongside £22million in furlough cash. That was followed by rates repayments from Tesco, Morrisons, Asda, Sainsbury’s, Aldi, Lidl and discount store B&M.
Others including Waitrose, Co-op, M&S, Boots, Poundland, Iceland and The Range have not offered to pay business rates despite some or all of their stores remaining open.
There has been growing unease about the use of Government subsidies after blanket measures by the Treasury meant companies benefited from public generosity even after they continued to operate throughout.
The Mail on Sunday revealed last month that foreign giants paid £5billion in dividends to their investors after taking out cheap Covid loans, which are issued by the Bank of England and guaranteed by the taxpayer.
The US owner of Boots gave billionaire Italian boss Stefano Pessina a windfall of almost £50million just days after the chemist drew £300million from the loan scheme. Walgreens Boots Alliance will hand Pessina another £50million in the coming weeks even though the debt remains unpaid.
A Whitehall source said at the time: ‘This may be acceptable [under the scheme’s rules], but it’s not exactly in the spirit of the scheme.’
High street campaigner Bill Grimsey said: ‘There has been a need to help businesses that have suffered. But there is no need to hand money to businesses that have traded throughout the crisis and in some cases traded better than they did before. These were blanket policies and those that don’t need it should now be paying the money back.’
Grimsey said all the firms that have handed back business rate holiday money are listed on the London Stock Exchange. Some will be keen to avoid the wrath of shareholders at annual meetings later this year – an issue that will not concern private firms.
The Range, owned by billionaire Chris Dawson, has been criticised for accepting about £36million from the business rates holiday despite keeping stores open and revealing in December that it made £47million in the previous year.
In September, Burberry raised £300million through a ‘sustainability’ bond to investors to fund ‘sustainable projects’ and help ‘drive social and environmental improvements’.
The company said: ‘We believe this is the right thing to do in the context of our improved third-quarter trading performance and financial stability, secured through rigorous cash management and the introduction of long-term funding via our sustainability bond.’