Eat in £2m Pasty Tax Row
Upmarket sandwich chain – Eat - is facing a £2m tax bill as a result of the government's plans to impose a pasty tax on sales of hot pastry products.
The chain has been involved in a long-running battle with HMRC over VAT payments related to certain products, according to reports in theDaily Telegraph.
Eat’s potential obligations are detailed in the most recent accounts, for the year to June 2011, which show that the company had been trying to resolve the situation for three years before March's Budget, which moved to introduce VAT on hot food sold by bakers.
While Eat’s accounts fail to reveal the whole saga, they show that the spat is over whether VAT was chargeable on "a product category", believed to be hot pies and other hot food.
Apparently, in July 2009, HMRC told the company it was seeking to reverse a previous decision on the matter, which in December 2008 had seen the retailer receive £519,249 back from the tax man. This followed an investigation into the company's sales over the previous three years.
But the latest accounts show that at June 30, 2011, the "potential VAT obligation is estimated to be £2m".
A HMRC spokesman said it was not able to discuss individual cases. A spokesman for owners, Lyceum Capital, declined to comment.