The baking industry is keen to promote its alternative 20% tax solution to the government, saying it understands the government’s desire to reduce anomalies and raise revenue.
Last week, key members of the baking industry met with staff from Her Majesty’s Revenue & Customs (HMRC) to outline its opposition to the proposed VAT hike on hot savouries.
The delegation included Ken McMeikan, chief executive of Greggs, Mark Muncey, chairman of the Cornish Pasty Association and representatives of the National Association of Master Bakers, the Conservative MP George Eustice and Lib-Dem MP Stephen Gilbert.
The alternative proposals put forward recommend that 20% VAT should only be added to products which have:
• been kept in a heated environment after baking
• been re-heated to order
• been supplied in heat-retaining packaging
One leading figure in the baking industry told British Baker: “The country has a substantial deficit and The Treasury is trying to raise money, as well as correct anomalies. Through correcting those anomalies they believe they will raise £110m in 2013/14.
“We support the government in trying to tackle anomalies. One of these, which is estimated to raise more than half the revenue the Treasury is looking to generate, is rotisserie chicken in supermarkets.
"The rotisserie chicken is believed to be cooked, put into heat-retaining packaging, kept in a heated cabinet and sold with no VAT applied. We think the government is right to try and correct anomalies like that.”
“What we don’t support is the ‘ambient air temperature’ definition of hot food as this is unworkable and unenforceable. Freshly baked products should not be subject to VAT if it is not kept in a heated environment after it has been baked.
“The alternative proposal would still allow the government to raise revenue, and reduce the anomalies in the tax system, but it would mean that we have a workable solution that customers will understand and bakery staff can implement.
“We understand what the government is trying to do, but we think the alternative proposal is an enforceable, workable way forward.”
Say NO to the Pie Tax