Mexican takeaway chain Chilango has lost its £700,000-plus VAT refund battle with HMRC after the taxman secured victory in a first-tier tribunal
THE TAXMAN has turned up the heat on takeaway businesses after winning a lengthy VAT battle against London-based Mexican eatery Chilango, after the restaraunt chain argued that its burritos, tacos and other menu items should be given a zero VAT rating.
In February 2013, the crowdfunded Mexican restaurant, which has five sites in London and two outside the capital, claimed a £681,623 refund from HMRC after deciding that its takeaway sales between December 2008 and March 2012 should have been zero-rated.
As well as that the burrito purveyors ceased to account for VAT its Mexican food items, with HMRC assessing that the chain owed £59,328 in VAT for June 2012, as well as £28,416 for the September 2012 period.
Chilango argued that that it was the overall temperature of the product that should determine whether the product was liable for VAT. Many of its products included meat filling which was heated, whereas its salad, salsa, cheese and other sauces were cold, which Chilango thought was reason enough to get away from paying VAT.
The FTT ruled that Chilango “failed to demonstrate that the products (containing all or some of meat, rice, beans and fajitas) were not heated for the common purpose of enabling them, or a part of them, to be consumed at a temperature above the ambient air temperature,” thus dismissing the firm’s appeal.
TS can only hope that Chilango doesn’t hike its burrito prices up; otherwise it will need another place to go after a Friday-night session.