THE GOVERNMENT has been forced to climb down over two controversial tax measures announced in the March Budget.
Chancellor George Osborne has been forced into a U-turn over plans to charge VAT on hot takeaway food from bakeries and supermarkets, while also amending plans to tax static caravans at the full rate of VAT.
The Treasury said yesterday that the so-called "pasty tax" would not be applied to food that is cooling down after being removed from the oven, even if it is still hot at the time of purchase.
In addition, tax levied on static caravans that are used as holiday homes will be cut to 5% from April next year.
The amendments are expected to cost the Treasury £70m.
There has been much hype and misinformation surrounding the so called pasty tax. Big busineses such as Greggs bake their pies from frozen and all to "cool" in controlled counters. Many bakers bake their pies centrally, cool quickly to a safe temperature (below 8C), transport and then reheat in their shops and hold again at a safe temperate of 63C or above. Unfortunately current legislation, thanks to a legal challenge 20 years ago means baking and controlled cooling escapes vat whereas reheating requires vat to be applied creating a competitive advantage to Greggs and others. Surely it is time to follow European legislation - e.g. Manfred Bog case, and only apply vat if the sale includes a significant service or caterign element.
Posted by: Rossco, 31 May 2012 | 09:16
Thank heavens for that. I have been getting up at 3 a.m. to secretly bake pasties with no VAT on them and then selling them on at random to passers by from my pattisserie. Now I can catch up on my sleep.
Posted by: Hector Blumenthal, 31 May 2012 | 09:21
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