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29 May 2012
The Government's partial concession over its planned 'pasty tax' is good in as far as it goes said the British Retail Consortium (BRC).
The Government says it will not now add VAT to food that is only hot because it is in the process of cooling down.
The BRC said this was a positive response to its evidence to the Treasury – sparing customers price rises in some circumstances and producing less confusion for retailers about when VAT has to be applied and when it does not – but the Government is still planning to extend VAT to some hot food products that have not previously been liable. The BRC firmly opposes any extension of the scope of VAT. And this will still leave different parts of the retail sector facing different tax regimes.
British Retail Consortium Director General Stephen Robertson said:
"This is good as far it goes. It will spare hard-pressed customers price rises on some products but the Government is still planning to add 20 per cent to the price of things like rotisserie chickens which have previously been exempt. It should not be extending the scope of VAT at all.
"The new proposal will produce less confusion for retailers and enforcers over when VAT is payable. The previous concept of 'ambient temperature' was impossible to define legally and unworkable in stores.
"I'm pleased our representations to the Treasury have produced results but this saga shows how vital it is that Government thinks policy through thoroughly and consults early with those who understand the sector rather than springing damaging changes upon us."