Morrisons faces £17m tax bill after losing legal bid over rotisserie chickens
Morrisons faces a £17 million tax bill after losing a legal challenge over whether VAT should be charged on its rotisserie chickens.
The first tier tribunal ruled that whole cooked chickens sold by the supermarket chain should be subject to the standard 20% VAT rate applied to hot food.
The legal challenge came after former chancellor George Osborne’s introduction of the so-called “pasty tax” in 2012, which clarified the VAT treatment of hot baked goods.
The move prompted a huge outcry, with critics accusing ministers of waging class warfare against pasty eaters.
Mr Osborne later staged a partial climbdown by exempting products that are left to return to “ambient temperatures” on shelves in bakeries and supermarkets.
Morrisons argued that its rotisserie chickens should be exempt because most of its customers consumed the product cold or reheated it later in the day as part of an evening meal.
Tribunal judge Mark Baldwin said in his ruling that HMRC did not make a ruling that the chickens were zero-rated for VAT and that Morrisons failed to disclose key facts about heat retention and sale while still hot.
He wrote: “Morrisons failed to disclose the heat and grease/fluid retention features of the chicken paper bags and the fact that (cool-down rotisserie chickens) were taken off sale after two hours, whilst they were still well above the ambient temperature and were not on a cooling trajectory that meant that they would only be ‘incidentally hot’ when sold.”
A Morrisons spokesman declined to comment on the ruling.
Published: by Radio NewsHub