A test case bid spearheaded by a Huddersfield Subway franchisee to side-stepping VAT has failed.
Subway argued that their popular Toasted Sub sandwiches should be exempted from VAT, and took its case all the way to the Supreme Court has failed.
But in June last year London's Court of Appeal backed an earlier High Court ruling Mr Justice Arnold that the Toasted Subs are heated for the customer's enjoyment, not for health reasons, and are therefore subject to VAT at the full rate of 20%.
Now that ruling has been upheld by the Supreme Court which has refused permission for an appeal against it.
In refusing permission the Law Lords said: "The application does not raise an arguable point of law."
Spelling it out the judge continued: "The policy seems clear. Human beings have to eat, but they don't have to eat in restaurants or to have their food cooked by others. It all seems tantalisingly simple."
However, he said that the VAT regulations relating to food had given rise to legal disputes with some caterers winning zero rated status for the likes of paninis, baguettes and bagels.
The test case was brought by a Huddersfield-based Subway franchisee on behalf of more than 1,200 others.
Lord Justice McCombe said that the case was of "great significance" to the lead franchisee, Sub One Ltd, and involved "very substantial sums of money" for others in the industry.
However, he ruled that there had been no breach of "fiscal neutrality" in this case, and that any rival who had secured a zero-rate for a similar type of product had done so in breach of VAT regulations and their cases had been wrongly decided.
He said that the "wrong test" had been applied in such cases, but neither the taxpayer nor the tax collector had sought to take the issue to the Court of Appeal until this case.
In 2012, Mr Justice Arnold, sitting in the Upper Tribunal (Tax Chamber), rejected an appeal by Sub One, which claimed it was forced to close because it was liable for VAT on its toasted sandwiches while its competitors were not.
Had Sub One triumphed, it would have been a major blow to the Treasury's attempts to close the VAT loopholes on food.