I have been rather quiet on the subject of the pasty tax, or in other areas of the country the pie tax, as at first, I did not understand what was being proposed. As it seemed from reading the various media report, blogs and Facebook comments this tax was going to be implemented. However, this is not strictly the case.
What is correct is the HMRC is looking to simplify various aspects of the VAT system which has not largely changed since its introduction in 1973. The HMRC is carrying out a consultation between 21st March and 2nd May 2012. This does not just include the provision of hot food, but other areas too. Click HERE for the consultation document.
If any of the proposals in the consultation document is accepted, then these will become law in October 2012. Meanwhile, the HMRC wants to hear from people on these proposals and in the consultation document has said it is willing to meet and listen to people’s view that may be effected by the changes to the VAT system.
At Tuesday’s full council meeting of Cornwall Council the Portfolio Holder for Economy was asked a question on the ‘pasty tax.’ He gave a few details on this subject which gave the impression it is not all doom and gloom. I am grateful to Chris Ridgers for providing me with further information after I sent him an email asking for more details.
Cllr Ridgers has also said to me after a brief meeting with to discussing this issue that Cornwall Council will be making a robust response to the consultation on the impact this tax will have on the Cornish economy. Furthermore, Cornwall Council is working closely with the Cornish Pasty Association to make sure the right message is being sent to the HMRC. Both the initiatives I welcome, as working together will give Cornwall a stronger voice against these proposals.
For instance, The Cornish Pasty Association have quoted that its members produce 106 million pasties per year which generates sales approaching £65m. Based on Cornwall’s GDP of £7 billion, Cornish Pasty Association pasty turnover is close to 1% of Cornwall’s GDP.
It was also interesting to note Cornwall’s largest pasty producer, whose pasties are not generally sold ‘hot’ have stated that the tax change is immaterial to their business. If this is true, then pasty makers and businesses might have nothing to fear from these changes.
What I think is important is any definition on what is hot is sorted quickly because it states in the consultation food over ambient temperature of the room will need VAT applied. That might sound simple, but bakeries and the like are not renowned for being cold places. It would be far better if guidance is given by HMRC that includes the temperature of the food which makes it hot. Because saying ambient room temperature will lead to all sorts of confusion if these proposals are carried out.
Maybe the same rules governing food safety which gives clear guidance that temperature over 63c are deemed ‘hot.’ So if these same guidelines are used than most pasties would be non-vatable because most pasties are left to cool before serving. However those pasties/pies/sausage rolls that are placed in a hot-box either to comply with food safety rules or to keep hot are currently subject to VAT.
My advice is to send in your views to the HMRC during the consultation (address in the consultation document) process because the humble pasty shop might have got caught inadvertently in the cross-fire between the HMRC and certain big businesses.
Only then after people have taken the time to write in and make the case something might actually happen that will not harm the Cornish national dish.