The old argument over VAT and hot food has recently reared it’s head again and this time there’s not a pasty in sight.
The Mexican restaurant chain Chilango has been in in dispute with HMRC over whether burritos are hot or cold snacks. Unfortunately for the restaurant it’s lost its argument with HMRC to the tune of £1 million after a judge ruled against the chain after it claimed its burritos, tacos and other items were cold food and are not subject to VAT.
The argument hinged on the fact that food items sold to be taken away cold are zero-rated while VAT of 20% is due on hot food to go. Tribunal judge Barbara Mosedale decided that customers expected hot food when buying from the restaurant. The fact that parts – guacamole, sour cream and salsa – were cold did not justify zero-rating.
This issue seems to crop up on a regular basis. Two years ago sandwich chain Subway lost a dispute over its Meatball Marinara sandwich and the ‘pasty tax’ issue was a highlight of the 2012 budget media coverage. No doubt the debate around the VAT treatment of food will again rear it’s head in the not too distant future, particularly if it gives sub-editors the opportunity to write a punning headline.
On a more serious note VAT can be a tricky subject and it’s always worthwhile getting advice from experts if you’re not sure of the implications for your business. Our tax experts are always happy to help.
To read more blogs on the subject of VAT take a look here.
