Confusion over which 'hot' foods will be liable for VAT
Bread not subject to the 20 per cent rise
But bakers argue there is no exact definition of bread
George Osborne's budget has left the taxman scratching his head after it prompted HM Revenue and Customs to launch a public consultation to discover the exact definition of bread.
Last week the chancellor announced VAT of 20 per cent will be extended to all hot takeaway foods such as pasties and pies which are ‘above the ambient air temperature at the time they are provided to the customer’.
However, as bread is considered a basic food, it is not subject to VAT whether it is warmed in the oven or served cold.
But bakers have pointed out there is no exact definition of bread.
For example, is a croissant considered a type of bread? Or a hot-cross bun?
At least HMRC can now have endless meetings at taxpayer expense deciding just what exactly bread is.
This could get very tricky because if bread is excluded aren't pizza bases bread?