What’s the attraction of a toasted bagel – the crunchiness or the warmth?
It may not seem like a important question, but it was the central issue in a VAT case that may have major implications for the catering industry.
The Great American Bagel Factory spent two years attempting to convince Customs and Excise that toasted bagels were not hot take-aways and should therefore be zero-rated for tax purposes. The company, which has 27 outlets around the UK, maintained that its bagels were toasted to make them crispy, not to heat them up.
A VAT tribunal eventually ruled in the company’s favour after tribunal members were taken to pick up four toasted bagels and then rushed back to court to eat them in chambers.
Vaughn Chown, from Levy Gee accountants, which advised the bagel company, said it was a ground-breaking ruling that would affect many other take-aways. “Someone selling hot chickens, for example, should be able to argue that they should be zero-rated because by the time the customers gets the chickens home they’re likely to be cold.”
The tribunal’s decision is expected to save The Great American Bagel Company at least £10,000 a month.
Source: Caterer & Hotelkeeper magazine, 18-24 January 2001