HM Revenue & Customs (HMRC) has published a document of the responses it received during the consultation period on its proposals to add 20% VAT on hot takeaway food.

An official statement from David Gauke, the Exchequer Secretary to the Treasury, said the HMRC has published a summary of responses to the consultation - VAT: Addressing Borderline Anomalies.

Included is a section named ’Catering – hot takeaway food and premises’, which details the 218 responses that were received on this measure.

This included 110 individuals who lobbied against the addition of VAT to hot takeaway products. Sixty-four responses were from businesses, including bakers and supermarkets, while 11 were received from trade bodies.

It detailed the objections made against of the taxing of products which were sold freshly-baked out of the oven , and the “difficulties for businesses to operate the ‘ambient temperature test’”.

Other products that will be exempt from the 20% tax, include Eccles cakes, mince pies and croissants. Freshly baked bread will also remain zero-rated and under the Government’s revised proposal, there is no longer any need to provide a definition of freshly-baked bread.

It added that some respondents had suggested “alternative approaches” for achieving the objective, by adding VAT to food which is actively kept hot, or defining hot in terms of the hot holding requirements in Food Hygiene Regulations.

The official HMRC response was that: “Under the new tests food that is cooling naturally, such as Cornish pasties and sausage rolls, will continue to be zero-rated.”

It added that 20% tax will be added to food, which is:

  • provided hot for the purposes of allowing it to be eaten hot (the existing criterion), or
  • cooked, heated or reheated to order – for example toasted sandwiches; or
  • kept hot, or where the natural cooling process is delayed – this would include instances where businesses kept food hot in hot cabinets, hot plates, heat lamps, etc. or where heat is applied in order to slow the cooling process (Cornish pasties and sausage rolls would therefore be zero-rated where they are cooling naturally in the racks, but not when they are stored in heated cabinets); or
  • provided in heat retaining packaging or other packaging specifically designed for hot food – where the use of such packaging is a clear indicator that food is being kept hot (for example foil-lined takeaway packaging); or
  • advertised, marketed or promoted in any way that indicates that it is supplied as hot.

Changes to the VAT rules will be enacted through a new schedule, which will be introduced at the Report Stage to the Financial Bill.

Catherine McKinnell. shadow treasury minister, said: "The government backed down on the pasty tax – they had to because that was the only move they could make – but they left behind them a legacy of arrogant disregard for ordinary people that will not quickly be forgotten. My only hope now is that the U-turn that has been made will be made properly."

Cornish pasties

As a result of the government U-turn, Stephen Gilbert, Liberal Democrat MP for St Austell and Newquay, said in a Commons debate: “People in Cornwall are relieved that this coalition government took soundings, listened and, at the end of the day, delivered a result that will protect an iconic and important Cornish industry.

"It is estimated that the measure will safeguard about 13,000 jobs in Cornwall, put hundreds of millions of pounds into the local economy, and guarantee the production of the 180 million Cornish pasties that are made in the county every year."

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