Tax group demands VAT simplification of food and drink rules

VAT rules for food and drink in the UK are “overly complex” and in need of reform, the Association of Taxation Technicians (ATT) has claimed.

Chancellor Rishi Sunak used his Spring Budget to scrap the so-called ‘tampon tax’ when the Brexit transition period ends on 1 January 2021.

The ATT hopes the decision to abolish the 5% rate of VAT on women’s sanitary products extends to other inconsistent areas of VAT. 

One classic example of VAT contradiction surrounds the lingering debate over cakes and chocolate-covered biscuits.

Cakes are zero-rated, whether they are covered in chocolate or not, while the standard rate of VAT applies to chocolate-covered biscuits.

Complexities like this, the ATT argued, are outdated and in desperate need of reform.

Michael Steed, co-chair of the ATT Technical Steering Group, said:

“Many of the rules for food and drink derive from the old purchase tax regime, which was replaced with VAT when the UK joined the EU in 1973.

“As a result, they are often out of date and difficult to apply in the modern world.

“This has led to the tax tribunal having to consider whether Jaffa Cakes are a cake or a biscuit, and whether Pringles are crisps or not.

“The decisions in these cases often throw up results which sound utterly ridiculous to the average person.”

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