Thursday, October 11, 2012
Financial Times: Tribunal Gets Taste for Toasted Sanwich Tax
Value added tax should be charged on Subway’s “toasted Subs” and “meatball marinara” sandwiches, according to a tribunal ruling that threatens to reignite the “pasty tax” row over the tax treatment of hot food from bakeries.
The case highlights the inconsistency of the VAT treatment of hot takeaway food as six previous tribunal cases have ruled that toasted bagels, baguettes and similar products should be zero-rated for VAT. The franchisee argued that this inconsistent treatment placed her at a disadvantage and breached the principle of “fiscal neutrality”.
Subway is pressing the government to extend favourable VAT treatment to toasted sandwiches after a U-turn by the Treasury in May over Budget proposals to tax pasties, hot pies and savouries sold by bakeries.
Subway said it had over 130,000 signatures for a “toast the tax" petition calling for toasted sandwiches “to be treated like pasties” which argued that “hard-pressed sandwich shop owners were being unfairly penalised by the chancellor.”
(Hat Tip: Rick Bales.)