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.