Sales Tax Articles
Sales Tax State Activity Update - September 2008
HMRC Gets Fired Up Over Hot Food Case
Another case has found its way before the VAT Tribunal that concerns whether food has been heated for the purpose of being consumed while hot. The Appellant in this case produces and sells ‘ciabatta melts' from retail bakery shops and contends that they are meeting safety requirements.
The ‘ciabatta melts' are partly cooked at a bakery and deep frozen before being delivered to the retail bakery shops where they are sold. They are then baked in ovens to a temperature of 83 degrees centigrade which is hot enough to kill bacteria. Afterwards, they are placed on a hot tray and kept at a constant temperature of at least 63 degrees. If the melts are not sold within two hours they are disposed of or consumed by the staff.
Evidence was presented that food safety regulations require freshly baked products to be kept at a temperature of 63 degrees centigrade or more, or cooled rapidly to 8 degrees centigrade or less.
HMRC took the position that the primary purpose of heating the melts was to allow them to be eaten while hot. The Appellant argued that the temperature of the product was directly related to the production process and the purpose of the hot beds was to keep the products at optimum freshness for up to two hours.
The Tribunal found that despite the fact that the melts may be eaten hot, or at least warm, this was not the intention of the Appellant but merely a by-product of the regulations requiring savoury foods to be kept warm. The Tribunal ruled in favor of the Appellant.
Netherlands Delays VAT Increase
The Dutch Ministry of Finance has decided not to increase the standard VAT rate from 19% to 20% which was due to take effect on January 1, 2009.
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