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At the risk of vexing the mob I can't see what all the fuss is about. This is a perfectly reasonable loophole to have closed in my view. It gave an unfair advantage to Greggs' and co even over other similar Bakers who have "heated counters" or the Bagel shop next door.
Shouldn't even be an argument!
Different viewpoint
I don't think it is the VAT on hot take away food that amuses/upsets people. It is the 'hotter than ambient' temperature criteria that is so hilarious, and will cause much argument and confusion ... as well as laughter. Only a politician could think of something so funny and expect it to be taken seriously.
I can just imagine the scene ... pasties out of oven and the hard up pensioners (and others) waiting for them to cool so they can get them cheaper and the fun the shops will have when the VAT man pounces on them and accuses them of not charging VAT on something and the shopkeeper has to 'prove' that the weather was roasting hot that day :)
This is better than fiction :)
Then here is the chance...
... for the "profession" to say loudly and clearly to the Government, to those against the "pasty tax", to media commentators, and to anyone else who is listening tha it would be much better for "all cooked takeaway food" to be subject to VAT rather than just that sold above ambient room temperature. That would mean being unpopular and criticised but it would be the right thing to do. This is where CIOT, ICAEW and everyone else could step up, even if it means in effect suggesting more taxation. What's that I hear? Silence.
We can't have it every which way.
Exactly, Shirley
We keep hearing that they are trying to bring certainty into legislation. But when you have, as we did in March, ambient temperature going from over 23C to -6C in the space of a week, where is the certainty? Why should the VAT status of a product depend on what time of day, or when in the year, it is bought? Unless the legislation brings in a numerical definition of 'ambient temperature', the legislation is unworkable.
Deadline extension
Some time between when we wrote/posted this article on Friday and this afternoon, HMRC extended the deadline for consultations on its range of VAT anomaly reforms until 18 May.
Could the pasty protests and controversies be a factor in this concession?
We'll do a survey of feedback from AccountingWEB members and forward it to HMRC. So if you would like to endorse Wild Billy's view, not is the time and place to do it.
I think Wild Billy's suggestion ...
... is eminently more sensible than the proposed legislation. But it brings its own potential difficulties - what is cooked takeaway food? Assuming that bread, already excluded under the changes, remains so, is a sandwich cooked or uncooked? Does it depend on the content of the sandwich? Is a BLT cooked food? Is a pastrami sandwich cooked food? A cheese salad presumably isn't cooked, but is a cheese and pickle sandwich cooked? I'll stop now.
This is not just about Greggs'
Lots of small bakers down hear in Devon & Cornwall will suffer unless this is overturned. The proposal is just plain daft as we all know.
Need for clarification and simplicity
This area has been in desperate need of clarification for years in view of the various court cases that have surrounded hot sandwiches, cooked takeaways, etc etc. People wanted tax simplification and they've got it - trouble is that they don't like what they've got.
As for the "ambient temperature" so-called fiasco, the reality is that the trader is able to agree a percentage of VATable sales with the VAT office based on their way of working, i.e. batch quantities etc. There are plenty of similar scenarios in retail where agreements are made in the absence of accurate point of sale data. The Greggs accountant will agree with the VAT office that, say, 50% of pies/pasties are sold hot and 50% sold cold. Another option is simply for the cashier to feel the pie/pasty in the bag - if it feels hot, then it is clearly above ambient temperate whereas if there's no feeling of heat, then it's clearly under ambient temperature. Alternatively, the shop could work out the approximate timescales for a batch becoming "cold". There are so many options that are realistic. The whole issue is another non-story.
As for damage to Cornish bakers, of course, that's a shame - there's no denying it. BUT, when VAT was introduced on Fish & Chips, it was likewise a shame for chippies throughout the country. That's life I'm afraid.
At the end of the day, the proposals mean things are simplified and fairer. Why should 20p on a 99p burger be lost to the Treasury, but the baker gets to keep the whole 99p of a sausage roll? Answers on a postcard please!
Legislation should be based on how something FEELS to the touch?
Another option is simply for the cashier to feel the pie/pasty in the bag - if it feels hot, then it is clearly above ambient temperate whereas if there's no feeling of heat, then it's clearly under ambient temperature.
That, I am afraid, is wrong. If it feels hot, that is all it means. Different people with different sensitivities will have different views as to what feels hot and cold. As will someone wearing gloves and someone not. As has already been pointed out in several places, a cold pie may well feel cold to the touch, but could still be well above ambient temperature. In short - the whole matter is too subjective and variable.
And I'm afraid that whatever your personal views on the subject may be, it is anything but a 'non-story'.
Devon & Cornwall
As for damage to Cornish bakers, of course, that's a shame - there's no denying it. BUT, when VAT was introduced on Fish & Chips, it was likewise a shame for chippies throughout the country. That's life I'm afraid.
Devon & Cornwall are historically very poor areas with wages below the national average. This will cause job losses in an area where unemployment is already high. I would suggest that the changes would have a much bigger impact in Devon & Cornwall who will have a higher proportion of bakers than the rest of the country.
Not the same at all!
"There are plenty of similar scenarios in retail where agreements are made in the absence of accurate point of sale data. The Greggs accountant will agree with the VAT office that, say, 50% of pies/pasties are sold hot and 50% sold cold. "
A breakdown could be prepared of vatable and non-vatable items, if there was sufficient data and time available.
What is so very wrong with this is that you cannot do the same with this, and get the same result, for the same items, on two consecutive days if the weather changes! It's a complete farce! An item has to be vatable, or not vatable, and cannot be vatable one day and not on another dependent on the weather and the opinion of the people selling or buying the item.
I think this should be made into a comedy film with tax inspectors, retailers and consumers all arguing over whether a particular pasty is vatable on a given day and customers insisting they want their pasties made cold before they will buy them and they want a discount because other people pay the same for hot ones :)
Ahhh, politicians (and HMRC) ...what world do they live in because I am sure it isn't this world!
Can anyone....
…actually give a good reason why pasties, pastries, pork pies and the like, should be free of VAT when sold hot, whilst fish and chips should not?
Some of the changes in the Budget (such as the cap on charity tax relief) raise genuine concerns and genuinely deserve an informed discussion – but the “pasty tax” isn’t one of them.
FYI, the requirement for a product to be “above the ambient air temperature”, which has been so derided, has been in the legislation for years. The Budget just removes the additional requirement whereby the product can be sold without VAT if it is (allegedly) heated for some purpose other than to be eaten hot (hopefully everyone knows this by now?).
A wholesale review of VAT law to remove these kinds of anomalies and uncertainties might be nice, but for political reasons it’s unlikely to happen. Judging by the incredible furore that this minor change has provoked, a full reform of the VAT system would be an election-loser for any government that was rash enough to introduce it.
Hot or cold?
Can anyone …actually give a good reason why pasties, pastries, pork pies and the like, should be free of VAT when sold hot, whilst fish and chips should not?
No - but that isn't the issue
FYI, the requirement for a product to be “above the ambient air temperature”, which has been so derided, has been in the legislation for years.
Yes it has. And the courts have already held it to be a nonsensical benchmark
I'm all for removing anomalies. But the proposed legislation simply opens the door for further anomalies.
shirley have a few jaffa cakes
and calm down ;-)
its not the politicians who devised this its the civil servants
@carnmores
I'm not upset :)
I think it's hilarious. I know civil servants will get the blame but it's the politicians that pass these laws. If they spent more Common time on serious business that needs discussion and a bit less time point scoring between the parties we may get some sensible workable laws being passed instead of the tripe we usually get!