theaardvark semi-professional wastrel

paul@theaardvark.co.uk


Pasty Gate Tax Thingy

Ok here goes. I'm far more worked up about this than is either understandable or reasonable and it's way too long to put on a tweet. Maybe this is what G+ is for.

The Chancellor hasn't just introduced a #pastytax. He hasn't even changed the rules to tax something that wasn't taxed before. He's simply clarified existing rules to stamp out some of the clever tax avoidance wheezes that UK Uncut get so animated about.

Let's get this straight. Most food is zero-rated. (VAT is charged but at 0%). If you buy a sausage roll off the shelf at a supermarket you won't pay VAT. The reason for this is because the 1970s UK Govt felt food was so essential you shouldn't have to pay VAT on it. However, the ability to eat out at restaurants or buy takeaway was not felt to be so important. We have to eat. We don't have to eat at The Dorchester or McDonald's. Or Greggs. So that food subject to VAT.

Easy. Right?

Problem is, how do you tell the difference between the two? What's the difference between a supermarket microwave chicken korma and one from your local balti restaurant? Now how do you write that difference in law?

The UK Govt came up with 2 fairly simple rules to tell the 2 types of food apart.
1) Any food sold to be eaten on the seller's premises (sounds like a restaurant / cafe, right?)
2) Any "hot food" sold to be eaten on or off the premises (sounds like a takeaway or fast food joint, right?)

Everything was hunky dory at that. For 20 odd years everyone knew what was intended and accepted it. But then some of the big companies started to push at the margins. They found weaknesses in the way the law was worded and exploited them.

One of them argued that when it sold sausage rolls it didn't deliberately sell them hot. They were cold sausage rolls that just happened to still be hot because they'd only just come out of the oven. And look.... nowhere in the shop did it say that they were "hot". And a judge bought it. HMRC lost the case.

Someone else argued that when they sold toasted paninis they toasted them so they would be crisp and to release the flavour, not so they would be hot. And a judge bought it.

Supermarkets ran a similar argument with the hot roast chickens and spare ribs they sold.

Suddenly these large companies weren't paying VAT on stuff that had always been vatable.

And it is / was mainly large companies that were doing it. Most small companies couldn't afford the expensive consultants to tell them how to exploit these wonderful wheezes (I know, I used to be one of the expensive consultants). Or the expensive lawyers to find new wonderful wheezes.

So what George Osborne has done is not to tax a formerly untaxed staple food of the common people. No, he's simply tightened up the rules to ensure that restaurant / fast food outlets, which are a bit of a luxury, are paying the VAT they should. (And Gregg's, for all their posturing, are a fast food outlet. They're no more bakers than Subway is. If you have to pay VAT on your McDonald's burger, why not your Gregg's sausage roll.)

And don't think for one minute that Gregg's et al are complaining about this change for your benefit. They found and exploited these loopholes to make more money. They know that you'll pay £1.50 for their sausage roll. So they'll charge you £1.50 whether or not they have to pay 25p of it to the Govt.

Now I'm not normally one to rant on about thieving businesses and tax avoidance. I used to work in the industry that advised these people. I believe that, within reason, businesses are free to organise their affairs in such a way to pay less tax within the law. And if Govt writes laws that are so vague that this sort of thing happens then it's up to the Govt to rewrite those laws.

What has really got my goat is the disingenuous way that Greggs (in particular) has spun this attempt to put the mockers on their little tax dodge into a class war in which nasty toff Osborne is stealing more money from the hard working, usually working class, pasty eater.

In an interview last night, Greggs' CEO or some such portrayed Greggs as class warriors defending the rights of the working man to eat his sausage roll VAT free. Whereas, they have been a tax avoiding big business whose actions, along with others, have resulted in this ridiculous situation. I was fair shouting at the TV in spittle flecked fury by the time he was done. And what makes it worse is that the meedja is lapping it all up. Bloody Ed Miliband was showing solidarity buying sausage rolls at Greggs. Whoever is doing the PR for Greggs is out tonight celebrating a job well done with a magnum of champagne and the biggest bag of cocaine you have ever seen, all on company expenses.

So, there you go. Fuck me , that turned into an essay. Sorry. It started out as a paragraph. If you've made it this far through I apologize and I promise to find a way to give those 10 minutes back. Take comfort from the fact that it took me way longer to write on the touch screen of my smartphone than it took you to read.