The Daily Mail and other media sources, including the BBC have been running stories on the budget proposal to impose VAT on hot take-out food.

Hitherto, things like bacon rolls and hot suasage rolls escaped VAT under our permanent derogation to the VAT Sixth Directive, which allows the to zero-rate most foodstuffs. Now, though, it seems that the preposterous Osborne is planning to bring them into the net, a deed which cannot be undone. The derogation once abandoned can never be restored.

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As you say, very fishy.

Did your Frankfurt Maulwerf give you the inside track on the German connection?

I might have the wrong end of the stick here but that won't stop me.

I don't know much about the ins and outs of these things but I take it that fish & chips are currently charged VAT at the regular (higher) rate or whatever it's called, as opposed being charged at the zero rate (i.e. effectively tax free.)

If so, I don't see what the problem is. Why doesn't Osborne just zero rate fish & chips etc, so still keeping them 'VATed', then introduce a new 'F&C' tax on them equal in all respects, except name, to the old VAT, but for administrative convenience have it collected as if it were VAT too? It's only words - as any bliar could tell, and he often did (e.g. "No new taxes" + "NI isn't a tax"). Any hypothecation necessitated by having to comply with shithead EU inspired legalities can be dealt with in the time-honoured fudged way, and as a last straw, by citing the precedent of the EU's own fcuking accounts.

Or does this derogation rachet mean he can't reduce VAT on fish & chips to the zero rate once it has been at the higher level?

It was Archtraitor Heath who introduced VAT, wasn't it? It's a pity that bastard is dead. He's escaped justice.



ADDED:
P.S. Right, I see there are three rates of VAT, not two: Standard (20%), Reduced (5%), and Zero (0%). And presumably there's a similar structure in Germany, so the "lower" rate mentioned in "German authorities [...] had to charge the lower rate of VAT on all hot take-out food, instead of the higher rate" refers to this third reduced rate, and not the zero rate. Maybe.

OK, it's now not so clean but if the Germans had to reduce VAT from Standard to Reduced, what difference in principle is there in reducing it from Standard to Zero instead, as I suggested above? And in any case, if the ratchet doesn't apply to the Krauts in this instance (or so it seems - on the contrary, they were ordered to move the rate down) why would it apply to us?

Christ! Some people have to earn a living dealing with this shit!

Completely unrelated, for which I apologise but I couldn't resist. Just watched a programme that included a short clip from Beyond the Fringe 1964.

Set during WWII. Dudley Moore walks up to Jonathan Miller.

Moore: "I want to join the few"

Miller: "You can't, there are too many"

Proof, if proof were needed, of the good doctor's hypothesis . . . :-)

Yup ... 'tis seriously complicated. As I see it, as long as some hot foods are charged at the lower (i.e., zero) rate, then all hot foods must be charged at that rate. By abolishing the zero rate for ANY hot foods, he can charge the standard rate for them all.

For God's sake Richard, stop being so serious, you are depressing me. Can't we talk about the UK Olympic team's costume or something?

No. I slogged away at it until I found something.

If I was PM, I'd scrap half the government by creating a new office: the Office for Sorting Out Departments also known as SOD Off.

Forget the rest of the budget issues this is a time bomb.

There is a Greggs on every corner round these parts.Children are weaned on Greggs sausage rolls,you can never pass a buggy in the street without seeing the occupant pacified by a pasty wrapped in a Greggs paper bag.There will be blood on the streets,Osborne may have just met his Waterloo on this policy.

Id have the riot police on stand by

Maggie had the poll tax riots,Osborne will have the Sausage Roll Rebellion.



.

PS I am partial to a Greggs cheese pasty myself,might be tempted to join the fray.

Really is time to resuscitate that full tax invoice / receipt campaign mentioned by Clarence the other day isn't it?

No doubt m'learned friends are eyeing this one up in the hope it'll be a nice earner like the Jaffa Cake VAT fiasco and the grasping dullards at HMRC are powerpointing, flip charting and having lots of Innovation Panel meetings to strategise their position. Then there's the question of regulating and approving foods - everything must be tested for compliance with EU diktat - a process headed up at the moment by this over promoted goon. (Who likely claims most of his food on "expenses" ...)

The instigation of a food police can't be far away (well actually if you follow up on Kommisar John Dalli it's already partially a reality) - ello,ello can you tell me what temperature that pasty is and the name of the cow used to produce it sir ? No ? well I'm afraid you'll have to accompany me to the station / that'll be an on the spot fine....

Slapping yet another tax on food (luxury item)- oh yes guys - good idea - just keep on and eventually you'll hit the law of unintended consequences.

How to get a variable rate tax on, compulsory basic training in - and annual permit for - breathing eh?

FWIW there's some informed opinion on VAT and why the politicians and big businesses like it over here

As someone who owns a business that amongst other things sells hot food (both eat-in and take-away), I have to say a big thank you to Richard for the work and research that led to this post. It would appear that we have been overcharged VAT on the some of the hot food we have sold in the past two years. We'll certainly be consulting with our accountants to see whether it would be worthwhile claiming back the excess VAT.

If I were you Id be changing my accountant for missing that one....what else is he missing?I run a business myself and VAT is rather an illogical tax,some stuff vatable, some not.I was aware of the huge implications that this VAT charge would make to many businesses in the UK,though it doesnt directly affect me,I thought that Osborne had just not thought this one through,but after Richard dug this up I now realise that there were ulterior motives.

Well done Richard indeed.

I used to manage petrol stations, and as I recall if a customer bought a pasty, paid for it and THEN heated it in the microwave it was zero rated....but if they heated it and then paid for it we were supposed to charge VAT on it. Try telling customers that!!

Yep
Cold take-away food is zero-rated for VAT, while hot take-away food is subject to standard-rate VAT;

Nuts in their shells are zero-rated for VAT, while shelled, roasted or salted nuts are subject to VAT at the standard rate;

Potato crisps are subject to standard-rate VAT, but maize- and corn-based snacks such as tortilla chips are zero-rated;

Frozen foods are zero-rated, yet ice-cream and frozen yoghurt are subject to standard-rate VAT.


Ha! - if you've time burn - take a look at the saga of HMRC vs The Jaffa Cake - Marie Antoinette telling the peasants to eat cake when they had no bread does rather come to mind.

Commenting on M&S's victory over HMRC regarding marshmallow teacakes... David Wrighton of The Times: “Anyone who has tried them knows that teacakes are so dangerous and addictive that they should be treated not as cakes or biscuits but as a Class A drug (and so be zero-rated for VAT).

The Revenue men spent 13 years pursuing the Jaffa cake and heaven knows how much of our money in the process. Self serving gits and an organisation unfit for purpose - couldn't be could it? I'd ask Harry Redknap.

I've done some reading on the issue and it appears that there are mixed opinions in the account professions as to whether a court case relating to VAT in Germany is applicable here in the UK so I'm not sure that my accountants haven't done their job.