South West accountancy firm Bishop Fleming has taken up arms on behalf of the Cornish pasty after the government announced hot pasties will now be subject to 20% VAT.
Tax experts in the Truro office picked up on the item in the Budget statement and now want to “kick-start” a new social-media campaign.
Bakery chain Greggs also vowed to fight the government’s proposal to impose VAT on certain hot foods as one of the anomalies covered in last week's Budget. The measure may have been triggered by German court rulings eliminating VAT on hot takeaway foods in the Manfred Bog case last year, but UK critics are complaining the new rules were sprung on the industry without prior consultation.
Around £30m was wiped off Gregg’s market capitalisation last week following the announcement, and the company has now asked for meetings with ministers to discuss the implications.
Until now VAT was chargeable on pasties that were heated for consumption, but the new rule means pasties that have not yet cooled from the cooking process will also be subject to full rate VAT.
From 1 October any pasty that has not cooled beneath “ambient temperature” must be sold at a price that includes 20% VAT.
Robert Bailey, Bishop Fleming‘s director of tax in Truro, said: This is madness, it means that Cornwall‘s pasty bakers will have to charge 20% more for hot pasties sold before they have cooled down from the oven.”