Greggs has put forward an alternative solution to the Government’s proposal to extend the standard rate of VAT to freshly baked food, which would see VAT charged on all food kept hot for sale in a heated environment after cooking, all food re-heated to order and all food supplied in heat-retaining packaging.
The company said it supported the Government's aim of tax simplification, including clarification of the definition of "hot takeaway food”.
However, it said it could not support the Government's current proposal where there is no attempt to keep it hot and which is not designed to be kept hot. It said the proposed changes were unworkable and would give rise to many new anomalies and further uncertainties.
Chairman Derek Netherton said: “While we understand the Government's need to increase revenue, we fear the current proposal will have a disproportionate impact on the specialist bakery sector, resulting in further unemployment, high street closures and reduced investment. In our submission we will also highlight our concern that the estimate of the extra VAT revenue generated makes insufficient allowance for the Income Tax, NI contributions and Corporate Tax that would be lost, as well as the cost of extra unemployment pay.
“We believe there is an alternative to the Government's proposal which will remove any anomalies and make the tax much simpler for both the Government and the consumer. We believe the solution is to see VAT charged on all food kept hot for sale in a heated environment after cooking, all food re-heated to order and all food supplied in heat-retaining packaging. This will very clearly differentiate between fresh bakery food and food that is being sold intentionally hot.
“Savoury sales are more than a third of our turnover, and the outcome of the consultation process could have a material impact on our sales and profits. This week, we will be responding formally to the consultation on the proposed changes and hope that the Government will listen to the logic of our alternative approach. In addition, we are looking as a matter of urgency at how best we would respond to a number of possible outcomes on behalf of our shareholders, customers and staff.”
