Subway loses toasted subs tribunal

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Subway franchises have lost an appeal concerning the VAT liability of their toasted subs and 'meatball marinara'. 

An Upper Tier Tribunal ruled that the two heated food products should be charged VAT, after one Subway franchisee brought her case before the tribunal. 

The franchise in Yorkshire argued that her business had failed because she was required to charge VAT on the items, where other retailers were not. 

Subway could now face VAT charges of 20% on their heated products, rather than leaving them at the zero rate. Around 1,200 Subway outlets were waiting to bring appeals against HMRC should the challenge have succeeded, according to the judgement.

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12th Oct 2012 13:29

what a waste of everybodys time

on or off the premises , hot or cold food

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12th Oct 2012 14:48


carnmores wrote:

on or off the premises , hot or cold food

It's keeping me in a job, so no complaints from me!

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12th Oct 2012 15:19

I agree

Self-interest notwithstanding, I find the level of understanding of the intricacies of VAT legislation required simply to sell sandwiches ridiculous.


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By Tax1976
15th Oct 2012 12:13

still as clear as mud as far as i can see

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15th Oct 2012 12:20

we are unanimous


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15th Oct 2012 12:28

VAT on Hot Food

It seems pretty straightforward to me ........if as part of the supply you are offered to have something heated up then expect to pay standard rated VAT.

If you take something from a non heated shelf and it happens to be warm/hot but it is not heated as part of the supply to you then zero rated.

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15th Oct 2012 12:43

One stop solution

Put 100% VAT on all food, hot or cold.

This will simultaneously reduce the UK's dependence on food imports, address the obesity epidemic, simplify vat, encourage homegrowing in gardens and allotments, not to mention slowing the relentless rise of fast food franchises.

It may even reduce the population, which is good for the green agenda.



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15th Oct 2012 13:00

As I understand it (and I don't claim any authority) VAT is not charged on items which are essential.  This is why on a supermarket shopping trip I won't generally pay it.  However, going to a restaurant is not an essential so VAT is charged.  In the light of this I am surprised that VAT isn't charged on all food from catering outlets like Subway whether they are hot or cold and whether they are eaten within or taken away.

The pasty tax has been mentioned in the article and another example is Jaffa Cakes - are they cake or biscuit?  For some reason one is considered essential and so is not subject to VAT and the other is a luxury so is subject to VAT.  I would have thought that cakes and biscuits are both luxuries although that is just my opinion.

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By maz444
15th Oct 2012 13:24

Zero rate all food?

VAT is not charged on essential items - food is essential.  So why not make all food zero rated whether it is hot or cold, wherever it is eaten. 

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15th Oct 2012 13:31

Hot food VAT

Complexity beyond belief.

The level of knowledge that these "narrow decisions" impose on traders and their bookeepers who innocently get it wrong must be addressed.Reducing red tape is one positive thing but the need for clarity on such issues as this case shows up is overwhelming.Making and selling a sandwich should not be this complicated.


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15th Oct 2012 14:20

Cheese and Toasted?

Hopefully this will remove this annoying cornerstone from the world of Subway forever.

If I'm having Turkey salad in a sandwich why would I ever need it toasted or with cheese?

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By SimonP
16th Oct 2012 16:15

I don't know about you but ...


tjhermitage wrote:

Hopefully this will remove this annoying cornerstone from the world of Subway forever.

If I'm having Turkey salad in a sandwich why would I ever need it toasted or with cheese?


I rather like my lettuce to be crispy and crunchy.  :-))


And turkey with cheese is definitely not kosher.

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By SimonP
16th Oct 2012 16:11

My two-pennyworth (exc. VAT)

So why not have two price lists.

A = Product sold cold or 'as is' at zero rate.

B = Product as A above (at zero rate) PLUS a service charge for heating which would be at standard rate.

Example: A pie sold cold or still warm or hot, depending upon how soon one buys it after it is cooked, would be sold at say £2 with no VAT.

If the pie is cold and a customer wants it hot, then they buy the pie for £2 (with no VAT) and pay an additional 10p plus VAT for the cost of the service.


Another suggested scenario: How about the retailer sells only cold food (no VAT) and provides the use of a microwave or toaster oven for consumers, at no extra charge, for them to heat their own food. What a pallaver.


But wouldn't it just be simpler to go back to the "good" old days where food consumed off the premises (takeaways) was zero rated as opposed to standard rated if eaten on the premises?

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16th Oct 2012 18:57

Provide a free microwave / sandwich grill on the way out

So they can sell it cold without VAT

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22nd Oct 2012 14:04

VAT is a simple tax!

With those words, Anthony Barber introduced VAT in the 1972 Budget (you were too young to remember it!). The rules regarding foodstuffs  are definitely not simple.

I take the view that the 1st October changes did clarify the rules regarding heated food, and certainly strengthened HMRC's position at the same time. The rules regarding premises are, however, more confusing and almost impossible to operate!

The Subway saga, and the related Manfred Bog, et al ECJ cases, have highlighted the unnecessarily complicated situation we have to work with. The Subway cashier cannot be expected to ask and respond to all the correct questions to enable the correct VAT to be identified on each transaction. We need a simple reduced rate to apply to food sold from a fast food outlet. This can be defined as any premises where the food is prepared for immediate consumption (irrespective of hot or cold, and eat-in or take-away). We can then make a distinction with the European phrase 'restaurant transactions,' which is where there is a much higher level of service.

At the same time, issues surrounding energy foods and drinks, frozen yoghurts, etc, etc can also be resolved.

I may be putting myself and my colleagues out of work ( I doubt it!), but a simpler tax system enables taxpayers to enjoy more certainty, and getting on with earning money, employing staff, and investing in the limp UK economy.

(carefully steps down off soapbox, to gentle ripple of applause!)

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22nd Oct 2012 14:26

Contradictory Rules

Crisps are standard rated, Doritos (seems to be anything made other than potato) are zero rated. The logic why this should be the case escapes me except that it seems that Doritos are food and crisps are not although generally they are packaged & sold identically with the expectation of being eaten as junk food.

A chocolate chip cookie is zero rated unless the chocolate is not in chip form, but covering it whereby it is standard rated. To clarify, we are talking about the same amount of chocolate but the VAT treatment is dependent on where it is.

I have no idea why chocolate cake is regarded a necessity but chocolate biscuits are a luxury.






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22nd Oct 2012 15:37

Chocolate is a necessity!?

On a very narrow point, perhaps chocolate is a necessity! Having just consumed a pack of mini jaffa cakes, and enjoyed two of my five a day!

(Funny how a discussion goes off-topic!)

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06th Nov 2012 11:40

Having Their Cake and Eating It.

I like the idea of zero-rating all food on the simple basis that all food is a necessity and why differentiate between what someone in their white ivory tower might consider to be a luxury or not.  I can't see HMRC going for this so how about a 5% VAT tax across the board for food from what ever source or however delivered to make it simple.  And while we are at it to simplify the tax system no organisation, no matter how big can pay less than 15% of their profits earned in the UK to the Exchequer.  I heard that Starbucks paid no or very little tax on their profits so why not limit the effect of tax avoidance.  It might also mean that the majority could benefit from paying less tax and the system would be simpler. How's that for some controversy?

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07th Nov 2012 09:10

Food at 5% - great idea!

Thank you, penpusher, for an excellent and obvious solution. All food to be vatable at 5%, no distinction between bread and chocolate, crisps and energy bars, etc.

It might be possible to retain 'restaurant services' at the standard rate, as is common on the continent.

If VAT were to return to being a simple tax, then life would be easier all round! (Although I would need to find alternative employment!)

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