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Pasty tax to come into force

27 | 09 | 12

The government's much-maligned pasty tax is set to come into force on October 1st, despite warnings from a number of industry figures that it could leave many businesses struggling to make ends meet by pushing up their prices to an unrealistic level.

Sales of hot takeaway food will attract VAT at 20 per cent from Monday, something that could affect sandwich shops, burger vans and other catering outlets.

Nicknamed the pasty tax because it is likely to affect companies such as Greggs which sell baked goods that are kept warm, the controversial measure was initially pushed back by the government after protests from across the hospitality industry.

Following this furore, the coalition announced plans to limit the new measure in order to ensure it does not apply to food such as sausage rolls as long as they are not being kept warm in a special cabinet.

Greg Mayne, director of indirect tax services at accountancy firm Reeves, told Caterer and Hotelkeeper the jump in VAT could prove to be extremely damaging for many people in the catering industry, especially given the problems caused by the current financial climate and the lack of consumer confidence across the UK.

"The message to traders, whether they are selling pasties from a shop or hot chestnuts from a stall, is don't bury your head in the sand and ignore the VAT," he added.

Companies making hot food to be eaten off their premises that fail to comply with the new regulations could end up facing a major fine from the government, explained Mr Mayne.

Emma Read, director of marketing and business development with foodservice analyst Horizons, recently described the lunch market - which could be inordinately affected by these taxation measures - as the fastest growing leisure sector in the UK.ADNFCR-16001031-ID-801458588-ADNFCR

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