Subway franchisee loses bid to ‘toast the tax'

09 October 2012
Subway franchisee loses bid to ‘toast the tax'

In a case reminiscent of the "Pastygate" tax row earlier this year, Subway's popular "Toasted Sub" sandwiches have come under legal scrutiny over whether they should be subject to VAT.

A leading tax judge has ruled that the Toasted Subs, and the meatball marinara, are heated for the customer's enjoyment, not for health reasons, and so are subject to VAT at the full rate of 20%.

High Court judge Mr Justice Arnold, sitting in the Upper Tribunal (Tax Chamber), rejected an appeal by a Huddersfield-based Subway franchisee, which claimed it was forced to close because it was liable for VAT on its toasted sandwiches while its competitors were not.

Backing a tribunal ruling in favour of the taxman, the judge said that it was "beyond dispute" that the Toasted Subs and the meatball marinara were "heated for the purposes of enabling it to be consumed at above ambient temperature".

He continued: "It seems clear that the majority of customers wanted the toasted Subs warm, and thus appetising. They did not want cold pre-toasted Subs, which would be much less appetising.

"It follows that I consider that the Tribunal was correct to conclude that both toasted Subs and meatball marinara should be subject to VAT at the standard rate."

Franchisee Sub One Ltd - which brought the test case as one of 1,200 Subway franchisees seeking to appeal against the VAT treatment of the chain's sandwiches - had claimed that they were heated in order to comply with food safety legislation, and as a result should not be subject to VAT.

Had the tax authorities lost the case, it would have been a further blow to the Treasury's attempts to close the VAT loopholes on food, following its climbdown in response to the controversy over plans to charge VAT on heated pasties.

Subway starts VAT campaign after pasties win reprieve >>

Government in climb-down on ‘pasty tax' >>

By Court reporter

E-mail your comments to Caterer News here.

If you have something to say on this story or anything else join the debate at Table Talk - Caterer's new networking forum. Go to jobs

Looking for a new job? Find your next job here with jobs

Blogs on ]( Catch up with more news and gossip on all Caterer's blogs
[E-newsletters]([ For the latest hospitality news, sign up for our E-newsletters
The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Check mark icon
Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.


Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.

trade tracker pixel tracking