‘It’s not a fair fight’: HMV boss issues Rachel Reeves Autumn Budget tax demand
Chancellor Rachel Reeves has been urged to reform business rates in the Autumn Budget by the boss of HMV.
Phil Halliday, in an up-coming episode of CityAM‘s Boardroom Uncovered show, said the current system should be altered to make it fairer for UK retailers.
The managing director added that businesses such as HMV are “unfairly taxed versus other sectors” and that business rates have “definitely been a contributory factor to lots of retailers leaving areas” of the UK.
The comments come after HMV announced it had suspended plans to open new UK stores in 2025 last November in the aftermath of Rachel Reeves’ first Budget.
The business had been preparing to open multiple shops across the country this year but HMV’s owner Doug Putman put a halt to the plans after the Chancellor raised a number of taxes in the Budget.
Earlier that week, UK retail bosses wrote to the Chancellor to warn about the wide-ranging damage that will be caused by the Autumn Budget, adding that job losses were “inevitable”.
In last year’s Budget, Rachel Reeves increased employers’ national insurance contributions by 1.2 per cent, and lowered the wage threshold at which employers must start paying the tax from £9,100 to £5,000.
She also decided to hike the minimum wage for over 21s, known officially as the National Living Wage, by 6.7 per cent.
Retailers are ‘easy pickings’ for Rachel Reeves
When asked what he would do if he was Prime Minister for the day on the up-coming episode of Boardroom Uncovered, the boss of HMV said: “I’d abolish business rates.”
When asked to elaborate, Halliday clarified that he would not get rid of them completely but instead reform the system to make it fairer for UK retailers.
He said: “We feel within the retail community that there should be a fairer distribution of tax burden and that retail is unfairly taxed versus other sectors.
“I think if you look at the sort of contribution to GDP versus contribution to tax revenue, [the tax burden] is disproportionate and it seems like there’s a sense that it’s easy pickings.
“There’s been talk of business rates reform and its never quite happened.
“There is meant to be, come April, a different business rate system that will benefit smaller properties.
“I guess we’ll find out in November in the Budget whether it’s completely going to happen.
“I don’t think everyone is definitely banking on it yet because it’s been postponed so often.
“I think there are places where they’re prohibitive and have definitely been a contributory factor to lots of retailers leaving areas.
“And then once that momentum goes from an area, I think it’s difficult to get it back.
“And the impact on that area can’t be positive so what is the overall loss of sticking rigidly to this?
“You’ve got loads of empty units that the landlord is paying the business rates.
“So the tax revenue is still being collected, but you’ve lost the jobs and the community hub and all of those things that follow it.”
When asked whether he felt whether it’s not a fair fight for retail, Halliday added: “I think that’s probably the sense, yeah”.
HMV on the rise after administration woe
HMV was bought out of administration in February 2019 by Canada’s Sunrise Records in a deal which saved 100 stores and 1,487 jobs. However, 27 stores closed and 455 people lost their jobs.
The business had collapsed into administration in the previous December for the second time in six years.
Sunrise was founded in 1977 and was bought by Doug Putman in 2014.
CityAM reported in March that HMV’s sales have more than doubled in the last three years.
The high street staple reported a turnover of £189.5m for the 12 months to 30 May, 2024, up from the £177.9m it achieved in the prior year.
The latest total came after HMV’s sales stood at £150.7m in May 2022 and £90.3m in May 2021, a year significantly impacted by the Covid-19 pandemic.
In the period from February 2019 to May 2020, HMV’s sales totalled £187.9m.