Following intense lobbying by interested parties the Government has withdrawn, or revised a number of proposed changes to VAT that it had intended to introduce in the Budget 2012. The two items that received the most publicity are listed below:
VAT on hot food
One of the most contentious and unpopular issues announced as part of the Budget related to the definition of hot takeaway food. The Government had intended to change the definition of hot food which would have meant that the sale of all hot takeaway food, with the exception of freshly baked bread, would be subject to VAT at the standard rate, currently 20%.
A consultation about the changes ended on 18 May 2012 and the Treasury have now announced new proposals which would mean that items which are hot as a result of just being cooked but are left to cool naturally will not be subject to VAT. This applies to food which is taken away in the same way as for cold takeaway food. This change will remove the requirement for shops to test the ambient temperature of foods. So shops which supply pasties hot out of the oven, but left to cool will not attract VAT. However, pasties, sausage rolls, rotisserie chickens and other food which are cooked hot to order or kept warm in cabinets, hot-plates etc. will be subject to VAT when taken away.
Caravans
Plans to introduce VAT on the sale of static holiday caravans are to be changed. Static caravans are currently zero-rated. The planned VAT rise to 20% has been replaced by a new measure which will see the sale of static caravans being subject to VAT at the reduced 5% rate. The implementation date of this measure is expected to be delayed from October 2012 until April 2013.
If you have any VAT queries please do give us a call.
Lesley Malkin – Audit Partner
