Of all the tax changes in the budget which the politicians, press and public could have got themselves worked up about – cutting the top rate, freezing grannies allowance, the ongoing process of pulling people into high rates, the marginal rates levied on those earning between £50k and £60k with children, the ever increasing duties on petrol, alcohol and tobacco – it is changing of what is charged VAT with respect of hot, take-away food which seems to causing the government the most trouble.
The ludricous lengths that that our elected wastals and the copy-and-paste artists in the MSM have gone to over the whole matter is laughable in the extreme. Thanks to them we have had to put up with, amongst other things, iDave and various cabinet ministers attemting to remember if, where and when they last ate a pasty (and the MSN chasing these recollections up); Millipede Jr (with his likely Brutus in tow) going to Greggs for lunch as part of a staged photoshoot; and supposed ‘quality’ newspaper The Telegraph resorting to live blogging the entire fiasco.
Fankly, if the whole business means anything, it is as
- yet another reminder how pathetically out of touch the inhabitants of the Westminster village really are,
- showing how woefully ignorant and stupid the so-called reporters who are paid to fill up the output of the media really, and
- a demonstration of how utterly stupid VAT is.
As I’m certain my readers are aware, VAT is an EU tax and thus subject to the whims of Brussels and the rent-seekers to be found in that city. It is therefore no surprise to learn that the reason for impsition of the ‘pasty tax’ is somewhat more than the bland statement Osborne made to parliament during his speech:
We will also address some of the loopholes and anomalies in our VAT system.
Hot takeaway food on high streets has been charged VAT for more than twenty years; but some new hot takeaway products in supermarkets are not.
A fuller account of the reasons why the children supposedly running the country are in the mess that they are in comes from Richard North of EU Referendum:
Enter Manfred Bog who, back in 1994 was running three mobile snack bars. After a series of disputes with the German tax authorities, Bog in 2006 fixed upon one particular issue, that 70 percent of his sales were being assessed for standard rate of VAT, while the remainder only attracted the lower rate of five percent.
The German authorities here were arguing that the larger proportion of the food sold was consumed “on the premises” (i.e., under a shelter provided by Bog) and, therefore, the trade was a “service” rather than the supply of goods – thus attracting the higher rate of VAT.
We should not detain ourselves with the finding of the German financial court, the Bundesfinanzhof. Down that path lies madness. Suffice to say that the case was joined by others, including a firm called CinemaxX, arguing the toss about popcorn sales. Again, the service/supply of goods argument was in the cooking pot. And then there was Mr Lohmeyer, with his snack stalls and a swinging grill, plus – of course – Fleischerei Nier. Don’t even go there.
Cutting to the chase on this bundle of cases, the judgement on 10 March last year ruled that the supply of food or meals freshly prepared for immediate consumption from snack stalls or mobile snack bars or in cinema foyers is a supply of goods rather than service – as long as the supply of services preceding and accompanying the supply of the food were not predominant.
Ostensibly, this did not apply to the UK – or so HMRC said at the time. Yet the Fish Fryers Federation and others disagreed, because the essence of the ECJ judgement was that they were supplying goods (as in foodstuffs), not services. And as the UK zero rates food, they were thus salivating at the prospect of a mega-refund.
“Ahah!”, said HMRC batting away such insolence. The fish fryers are caught either way. Their tax category – devised uniquely by the UK – includes “hot take-away food” and well as catering services. It matters not whether it is food or service, VAT still applies, regardless of Bog.
And there gripped the cold, mindless jaws of the VAT Sixth Directive, of which the ECJ had so cruelly reminded us. To their horror, HMRC have confronted their worst nightmare. If the fish fryers are selling hot food rather than services, and have to charge VAT on it, so does everybody else who sells hot food.
That’s right, Osborne had no choice in the matter.
Can we leave yet?