"Ironically" despite claims by the government that it wishes to "simplify" taxes, George Osborne's recent budget has rather muddied the waters and left HMRC and taxpayers scratching their heads over a number of matters eg 20% VAT on hot takeaway foods ("above the ambient air temperature at the time they are provided to the customer").
This has caused some confusion over what to do with bread, normally considered a basic food (and not subject to VAT), when it is served warm.
Therefore HMRC have launched a public consultation "VAT Addressing Borderline Anomalies", that seeks to discover a.o. the exact definition of bread.
- What is bread?
- Is a croissant bread?
The consultation document states:
"For a number of years, the borderline between hot takeaway food (standard-rated) and cold takeaway food (zero-rated) has been the subject of litigation, with some retailers arguing that the purpose of heating their food products is to improve their appearance or to comply with health and safety regulations, rather than to enable them to be consumed hot.
So, although many retailers and takeaway outlets charge VAT on the sale of hot chicken products, hot pies and toasted sandwiches, some retailers and bakery chains sell similar products zero-rated."
Greggs has already threatened to take legal action if HMRC tries to label its food as 'hot' and subject to VAT.
So much for simplification!
Tax does have to be taxing.
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