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VAT on toasted sandwiches

Volume 561: debated on Wednesday 24 April 2013

The Petition of employees and customers of Subway,

Declares that VAT is being charged on toasted subs and sandwiches, further that as a result, the sandwich shop industry, which employs tens of thousands of hard working people and supports thousands of small businesses, is now being placed under threat and that sandwich shop owners should be treated fairly.

The Petitioners therefore request that the House of Commons urges the Government to maintain its recent U-turn on pasties and additionally to remove or reduce the tax across the board, in line with our European neighbours.

And the Petitioners remain, etc.—[Presented by Mr John Leech, Official Report, 25 March 2013; Vol. 560, c. 1437.]


Observations from the Chancellor of the Exchequer, Treasury:

The Chancellor announced in Budget 2012 a number of budget measures designed to clarify or to address anomalies and loopholes in the VAT system. The clarifying measures included an amendment to ensure that all hot takeaway food is subject to VAT.

The new legislation was debated and approved by Parliament last year and included in the 2012 Finance Act. It came into effect from 1 October 2012. The legislation does not distinguish between different hot takeaway food products. Any food product that is heated to order for a customer, kept hot or marketed as hot, is liable to VAT at the standard rate. If it is left to cool naturally, it is not. Toasted sandwiches have been liable to VAT at the standard rate since 1984, and there is nothing in the new legislation that changes this.

This petition proposes removing or reducing VAT from hot takeaway food “across the board”. When the UK joined the European Community in 1973 we signed up to the general agreements that covered the application of VAT throughout the EC. Under these and successive agreements, we are allowed to keep our existing zero rates, but we may not extend the scope of our existing zero rate reliefs. Having excluded hot takeaway food from the scope of the zero rate in 1984, the UK cannot legally reinstate it.

Some EU Member States apply a reduced rate of VAT to restaurant and catering services, which is provided for in EU law. However, such a relief would necessarily go far wider than simply the treatment of toasted sandwiches, and would therefore come at a significant cost, which would have to be met either through increasing other types of tax or from increased public borrowing. Increasing borrowing would risk raising interest rates and undermining international confidence, which would damage the recovery and have an adverse impact on individuals, families and small businesses, including those in the hot takeaway food sector.

This Government do not plan to make any further changes to the legislation on hot takeaway food.