8:24AM, Sat Sep 22, 2012

Greggs The Bakers Anger At Pasty Tax Plans

By Adrian Hogg Location: Newcastle

Greggs the Newcastle-based bakery could be set for a clash with the Government over a planned 'pasty tax'.

In his budget, Chancellor George Osborne announced an end to VAT exemption for hot food items such as pies and sausage rolls.

Takeaway foods such as fish and chips are already subject to the tax, but in a move which could mean more expensive lunches for many people, Mr Osborne announced: "VAT will also apply, to the extent that it does not already do so, to the sale of hot food, cold food consumed on the supplier’s premises, sports drinks and holiday caravans. This will have effect from October 1, 2012."

Greggs, which with 1,500 stores throughout the UK beats McDonald’s to the title of Britain’s biggest takeaway chain, has successfully claimed in the past that, as its pasties and pies are baked in store they just happen to be hot, and thus should be VAT exempt.

However, the Treasury regards this as an 'anomaly' and want it stopped. The move would also affect rotisserie chickens sold in supermarkets.

A spokesman for Greggs said: "We do not believe that our freshly-baked savoury products should be subject to VAT and we will be making strong representations to the Government regarding the proposed changes."

In its latest figures, Greggs, which serves an estimated six million customers each week, announced an increase in sales of 5.8 percent, with a rise in pre-tax profits of 1.1 percent to £53.1m.

And last year, the company opened a new £16.5 million bakery at Gosforth Park, replacing an older bakery in Newcastle.