Ocado boss Tim Steiner considers rumoured tax raid on online firms “inappropriate”

Ocado’s Steiner said he did not know who the proposed windfall tax would be put on. But he said: “People who make profits generate taxes. So if you make more profits you generate more taxes, that’s already the case.”

He added: “So I think in terms of the grocery industry, or in terms of online retail,I think it would be wholly inappropriate to try and have a higher rate of tax than the existing corporation tax that is already charged to companies on their profits.”

Treasury officials are also reportedly set to discuss with tech firms and retailers how a potential online sales tax would work. Steiner pointed out there is already a sales tax, VAT: “It’s applied equally to whoever sells a product.”

He does not think it is appropriate for a sales tax on a retailer because they operate from a different type of premises.

For the year to November 29, Ocado’s retail arm, its joint venture tie-up with Marks & Spencer, recorded growth of 35.3% to around £2.2 billion.

The partnership launched in September after M&S replaced Waitrose as a grocery supplier to Ocado.

Steiner said millions of people tried online shopping for the first time during the pandemic.

He added: “Going forward, customers who have experienced the benefits of online grocery shopping are likely to become ever more discerning. Winners in the online channel will need to offer the very highest standards of customer service and the ability to serve a full range of customer missions. These include the full family basket as well as the convenience shop, the option of direct to home or pick up at the store, the same day or next day. “

At Ocado Solutions,which provides tech and logistics to international supermarkets,sales improved 13.6%.

Ocado narrowed statutory pre-tax losses to £44 million from a £214.5 million loss. Underlying earnings increased to £73.1million from £43.3 million.

The group said the benefit of higher revenues in the UK retail business was partly offset by increased investments and Covid costs.

The company is planning to invest £700 million in the business this year, including on new tech and more warehouses as it looks to cope with more demand.It also wants to open smaller ‘Ocado Zoom’ sites in London, where people can order from a limited range for a quick delivery.

But Ocado cautioned that retail revenue growth is “ highly dependent” on the length of Covid-19 restrictions.

In addition, Ocado gave an update on a legal case. In October Ocado said it was notified of a press release from Norwegian technology and robotics manufacturing company, AutoStore, around an alleged infringement of their rights.

Ocado today said: "In October 2020 legal proceedings were issued by Autostore against a number of Ocado entities in the USA and UK.  Having analysed the claims we remain of the view that we do not infringe any valid Autostore rights. "

The firm added: "Their claim in East Virginia has been stayed and we have filed defences in all other forums, and have brought our own proceedings against Autostore in the USA for infringement of certain Ocado patents and violation of US antitrust laws."

Ocado said it is very difficult to predict litigation costs, "but we expect to incur significantly more legal costs than in 2020. These will be treated as exceptional items".