The dilemma of when hot food becomes just lukewarm food has cost Morrisons supermarket chain a cool £17m.
The supermarket had appealed against HMRC’s standard 20% VAT charge on its cooked rotisserie chicken. However, the first-tier tribunal stated that for hot food to be zero-VAT rated it must be ‘hot’ when supplied to customers, and meet the conditions set out in Note 3B (Value Added Tax Act 1994, Schedule 8, Group 1).
The chickens were not heated to order, were not kept hot until sold, and were not advertised as hot, all condition for being zero-rated.
The judge was also unhappy that the supermarket failed to disclose key facts about its packaging that helped control the chicken’s temperature.
So, Morrisons will be paying up!
