Tax experts in the Truro office of South West accountants have spotted an item in George Osbone’s latest budget that will threaten the Cornish pasty.
A “small print” item in the Budget Statement announced that hot pasties will now be subject to 20% VAT, while cold pasties remain zero-rated.
Until now, VAT was chargeable on pasties that were heated for consumption: the new rule means that pasties that have not yet cooled from the cooking process will also be subject to full rate VAT.
“This is madness”, said Robert Bailey, Bishop Fleming’s Director of Tax in the firm’s Truro office.
“It means that Cornwall’s pasty bakers will have to charge 20% more for hot pasties sold before they have cooled down from the oven”, he warned.
Many pasty-makers sell pasties in their bakery shops straight from the oven. The pasties are held in baker’s trays behind the counter and sold as fast as they can be made. From 1st October, any pasty that has not cooled beneath “ambient temperature” must be sold at a price that includes 20 VAT.
“We all had a good laugh about some of the EU’s food rules, like the need for bananas to be of a certain shape: but this new VAT rule for pasties straight from the oven is daft”, said Mr Bailey.
“Unless a Cornish baker refuses to sell a warm pasty until it has cooled, or keeps his shop at equatorial ambient temperature, the full 20% VAT rate will apply. That would mean having a two-tier pasty-pricing: cheaper ones that have cooled, and price plus 20% for those that are still warmer than the shop temperature”, said Bishop Fleming’s tax director for Cornwall.
“We’ve only just seen the results of the World Pasty Baking championships – the ‘Pasty Oscars’ for commercial and domestic pasty-bakers – but this VAT proposal could see pasty prices leap up by a fifth if you don’t have the patience to wait for those newly-made pasties to cool!”, said Robert Bailey.
“This has to be something that the Cornish pasty bakers and pasty-buyers should be fighting through the power of the social media during the brief consultation period that ends on 4th May: Bishop Fleming will get the ball rolling by launching a Facebook group, and using our extensive Twitter network”, he added.
Thanks to Bishop Fleming for allowing us to post this article.