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I had the pleasure of visiting the new Birds shop in Heanor to celebrate with them the fact that the Government has agreed to amend the so-called “pasty tax”. Amber Valley is home to a number of great bakeries and they form a vital part of our high streets. Last week in Parliament, I called on the Government to consider the implications of its intention to levy VAT on a number of baked goods, which in addition to increasing price, would have been unworkable and may have damaged our high streets. Here’s what I said:
“I went to a couple of bakers in my constituency to see what the measure will mean. The sausage rolls are out of the oven and slowly cooling down in the very much non-heated—I was careful to check—displays in the shop. I guess that if they have been there for 20 minutes, they will still be hot, and therefore there might be VAT. If they have been there for 30 minutes, they might be on the border. If they have been there for 40 minutes, perhaps they are cold enough for no VAT. I have a horrible picture of the member of staff having to poke their finger into my sausage roll to check whether the one they are selling me is cool enough not to charge VAT on or still too hot.
There is a practical issue of how the shops will know day to day that the products sat cooling have cooled long enough for me to get a 20% discount or have not cooled, so the customer has to pay VAT. I suspect that such shops will put VAT on everything and put the prices up by 20%, and they will get a nice windfall for the bits that they can convince the Revenue are not VAT-able. In practice, they will not want to charge separate prices depending on whether someone buys a product marginally above or below the ambient temperature. That would be an unfeasible and rather strange situation for everyone to get into.”