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Pasty tax would be unworkable, says Greggs boss

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Freshly baked savouries should not be subject to VAT ‘as we don't keep them hot after they've been made nor are they heated for the customer’, said Ken McMeikan, Chief Executive of Greggs, writing in The Northerner blog hosted by The Guardian.

McMeikan said such items were ‘baked in store and then sold to our customers at various stages of cooling’.

‘Under the Chancellor's proposals, any food that is sold "above ambient air temperature" will become subject to VAT, whilst those products that are served "at or below ambient air temperature" will not be. This will mean that some savouries will become subject to VAT depending on how long after they are taken out of the oven they happen to be sold,’ he wrote.

‘This will create enormous complications and confusion for our staff and our customers. We sell over 300m savouries a year, and we strongly believe that legislation that requires us to determine the temperature of the product before it is sold is unworkable.’

McMeikan said there could be ‘huge repercussions for the entire bakery industry’ if the government did not reconsider.

The ICAEW Tax Faculty said it was ‘always the intention to standard-rate pies, sausage rolls and pasties intended to be consumed hot’. That would not change, but the draft legislation published by HMRC appeared to catch such items ‘when sold from an outdoor market stall (or possibly even Leeds railway station) on a cold winter’s day, when they would have to be frozen to be below the ambient air temperature’.

The Faculty added: ‘We are sure that this is not the intention of Parliament and will make comments to this effect.’

David Cameron said he had last eaten a pasty from the West Cornwall Pasty Company at Leeds station, but it emerged that ‘there had been no such outlet at the station since 2007’, the Financial Times reported last week. ‘Downing Street admitted the prime minister was mistaken – it had been in Liverpool – but insisted he “loved pasties”.’

HMRC’s consultation is set to end on 4 May.

YouGov poll

Two thirds of people who often buy pasties or sausage rolls hot will either stop buying them, or will buy them cold instead, when VAT is added to all hot takeaway food, according to a YouGov survey for The Sunday Times.

Asked whether they thought hot pasties and sausage rolls should be subject to VAT, 21% said yes and 69% said no. Of the 366 respondents who bought them ‘very often or fairly often’, a quarter said they would pay the extra, 36% said they would buy cold pasties and sausage rolls instead, and 32% said they would stop buying them.

Almost half of the 1,567 people surveyed at the end of March thought ‘the richest’ people would gain the most from the recent Budget, and a third thought pensioners would lose the most.