Surely everybody has heard something about the pasty tax fiasco – but be careful that your temperature doesn’t rise above ambient otherwise you could attract a 20% VAT charge!
The problem arose because there is no VAT on food but there is 20% VAT on catering, and there has long been uncertainty about whether a pasty constituted “food” or “catering”. It all seemed to hinge on whether the food was sold at a temperature above the ambient temperature. In theory, a pasty served at 20°c could be VAT-free in the summer and attract a 20% VAT charge in the winter! Furthermore, if you waited long enough in the shop for the pasty to cool down to ambient temperature then you would save yourself 20%. Some people suggested that the VAT rate should apply only where the pasty was kept in a heated cabinet, but the government decided to introduce certainty by making all pasties subject to VAT at 20%.
This led to a huge outcry and this week the Government backed down. There were accusations that it was an attack by the posh boys on the working man – one member of the House of Lords claimed never to have eaten a pasty and believed it to be not unlike boeuf en croute (somewhat tongue in cheek, or prime steak in cheek!).
Embarrassment all round for George Osborne but, should he resign? If he does he can look forward to a seat on the Board at Greggs – boy, have they had some good publicity!