Government performs pasty tax u-turn

The government has performed a dramatic u-turn on its tax for hot pies and pasties.

The move comes after weeks of sustained campaigning by the baking industry, including British Baker's own e-petition, a campaign by Greggs, the largest retail baker in the country, and a demonstration by the industry at Westminster which saw a petition of half a million signatures handed in at Number 10.

It is believed government has altered the definition of what is a "hot" pasty to allow the reversal of its plans.

Following the announcement last night (Monday 28 May) Greggs shares shot up and are currently trading at 495.00p per share, up 28.40p (+ 6.09% year-on-year change).

During a parliamentary debate last week, MPs from all three main parties criticised the plans claiming they were unenforceable and would impact jobs and businesses.

A spokesman for the Treasury told the BBC website: "The Budget announced a consultation on a change to VAT on hot takeaway food, designed to remove inconsistency and ambiguity in the system and level the playing field across the takeaway food market.

"After extensive engagement we have improved the policy, addressing practical concerns, ensuring that the new regime could be as simple as possible to apply.

"We have addressed these in a way that allows us to remove the inconsistent VAT treatment, while not imposing any additional requirement on businesses to test the temperature of their products."

Ken McMeikan, chief executive, Greggs, told British Baker: "It’s fantastic news. There are not many days when you get a government decision of this magnitude, and one that you believe to be absolutely right for the industry. I cannot tell you how pleased I am for the whole baking industry.

"The government were true to their word. They said there would be a consultancy period, which they then extended, and they responded within 10 days.

"Most importantly freshly baked food that isn’t being kept hot, isn’t being kept in heat containing packaging, isn’t being marketed as hot, and isn’t being cooked to order, will not be subject to VAT. That’s great for customers and great for bakers."

For more details see www.bakeryinfo.co.uk and the next issue of British Baker.

Let us know your reaction to the news by tweeting us @BritishBaker or emailing bb@wrbm.com

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