Leeds retail bakery chain Ainsleys has vowed to fight on in the High Court, after HM Revenue and Customs appealed against a tribunal ruling on VAT payments this week (British Baker, September 1, pg 3).

The case, which has vast implications for other bakers, revolves around the VAT status of Ainsleys’ hot ciabatta melts product. The retailer is seeking a £171,858 refund on VAT payments made since 2001. The case started in October 2004 and a VAT tribunal found in Ainsleys’ favour in August this year.

MD Roy Kelly told British Baker: "Unfourtunately there will be an appeal. I will be in the High Court to defend our case. It is disappointing to have to go through another legal process."

He said a final decision from the High Court was now likely in around four months time.

Under VAT law, hot food attracts VAT at standard rate. However it can be exempt if it is only served hot to comply with food safety regulations.

Ainsleys argues that its ciabatta melts are only served from hotplates to keep them fresh and that the tomato paste in them contains pathogens which need to be heated to make them safe to eat.

Takeaway chains, including bakery giant Greggs, are understood to be watching the case with interest.