Pasty tax-hit company sold to footballer

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A consortium featuring former England footballer Danny Mills has acquired West Cornwall Pasty Company after the firm collapsed into administration on Friday.

Most jobs were saved following a pre-pack deal, arranged by administrators PwC, of the majority of the business to a private equity (PE) fund backed by the BBC pundit and Celebrity Masterchef finalist.

The £7.5m Enact fund bought the 34 most successful of the company’s 65 outlets. PwC said 274 out of a total of 366 jobs had been saved by the emergency sale.

On the collapse of the pie seller, Chris Cormack, Enact’s investment director said the chancellor's “pasty tax” had been a contributing factor, ending a VAT exemption for hot baked goods.

“The business has struggled to cope with the effects of...

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'Pasty Tax'

At the time of writing, we are waiting for the Court of Appeal to hand down its decision in the Sub One Ltd T/A Subway case. I understand that the expectation is that the case will be referred to the European Court. This will therefore prolong the uncertainty that this type of business faces with regard to VAT.

If, of course, the CA refuse to refer the matter, then West Cornwall, and numerous Subway and other hot food outlets will have to suffer the 20% rate on their sales. Since there is little input tax available for recovery, the cost to any such business is significant.

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Comment from Steve Hodgetts of Baker Tilly Tax

Whether VAT should be applied to certain foodstuffs has long been a contentious issue in the UK; specifically excluded from the benefit of the UK’s zero-rating of foodstuffs is any supply in the course of catering; which includes any supply of hot food for consumption off the premises from where it is supplied. As an EU tax it is important that VAT is harmonised across the EU, however, in addressing any VAT anomalies in the UK, it must be recognised that the unexpected consequences of hasty tax changes may cause business failures.

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