John Endacott, tax partner at chartered accountants Francis Clark, whose ‘pasty summit’ in Truro in April this year attracted national headlines, said the collective efforts of the pasty industry, local politicians and the people of Cornwall had helped persuade Ministers that the original plans were flawed.
Chancellor George Osborne announced in his March Budget the intention to impose 20% VAT on hot baked snacks like pasties and sausage rolls from October to close what he said were anomalies in the tax system.
But following a concerted campaign he has confirmed that the 20% tax will now be charged only on cooked pasties that are kept hot, but not those that are cooling down after coming out of the oven.
John, who has just been named Tax Writer of the Year at the LexisNexis Taxation Awards 2012 for his work on a range of tax issues, said: “Francis Clark worked closely with the industry in Cornwall, local MPs and the media to help evidence the hugely negative impact the pasty tax could have had on Cornwall’s pasty industry, and that evidence has clearly been heard.
“This is a major concession and the Government now seems to be proposing exactly what we have been campaigning for - acceptance of the unique position of freshly baked goods but supplemented by some new, more objective tests to prevent abuse. This new approach will still mean changes for most bakeries and it will be important to consider carefully the implications. But any changes should be fairly minor meaning that jobs and businesses should be safe”.
John paid tribute to his VAT team colleagues Julie Towers and Richard Staunton for their work on the pasty tax issue, and to Lewis Banfield who worked on a related campaign about plans to introduce 20% VAT on static caravans. The Government has also relented on this proposal, reducing the VAT level to five per cent and delaying its implementation by six months.
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