tiintax

I decided to make my first response to a government consultation this one: the consultation on “the pasty tax” (or, as HMRC calls it, “VAT: Addressing borderline anomalies”).  Published on 21 March, it’s open for comments till 4th May.  That doesn’t mean only VAT specialists can reply: you and I are welcome to reply too.  It says that:

HMRC would like to hear from businesses involved in the manufacture and retail of affected goods or the provision of affected services; consumers affected by the changes and tax practitioners

You and I are in the “consumers affected” bracket, if we’ve ever bought a pasty, drunk a sports drink, used a self-storage place, had a haircut or stayed in a caravan.  You email your thoughts to  david.roberts4@hmrc.gsi.gov.uk  and I’d encourage you to drop him a line.  No, really.

(Warning: you should understand that your name and what you said might be published with the other responses to the consultation, if that’s an issue for you.  Don’t reply from your work account!)

Here, then, is what I sent to David Roberts.  Feel free to nick any bits of it that seem interesting to you and recycle them in your responses.  Or if you really want to, send him an email saying “I agree with Wendy Bradley”, although I’m not sure that would do any good, because government tends not to listen to “campaigns” – and I should make it clear I’m not actually “campaigning” for or against the proposals, I’m just giving my personal response to the document.  Here goes:

Dear Mr Roberts

This is an individual’s response and is also posted online (with commentary) at https://tiintax.com/.

1. The pasty tax.  As far as I can see, the government has tied itself in knots trying to keep food exempt from VAT except where it’s included in catering. I can’t see they’ve succeeded in drawing a line at all.  And I can’t see that a piece of legislation that depends on “ambient temperature” is a simplification.  It seems to me rather an invitation to frivolous legal challenge on the grounds the weather was hot, the pie was lukewarm…
2. Equally, I have problems with a sports drink provision which depends on how the beverage is *marketed*. For example, if I were a sports drink manufacturer I’d immediately imitate Mad Men and market my zero-rated nutritional sports drink under the slogan “it’s toasted!” and defy HMRC to do their worst!
3. I would instead suggest using a formula under which food ingredients continue to be zero rated but once they are prepared in any way the exemption depends on not breaching healthy limits (to be determined by a further consultation with medical experts) for fats, sugars and salt.
4. So the legislation would in effect go
   1. As now, all “food of a kind used for human consumption” would be zero rated for VAT.
   2. Excepted from that would be any food which had been prepared, cooked, or subject to any kind of processing
   3. Unless the resulting food had fewer than (x%) fat, (y%) salt and/or (z%) calories.

This would achieve your stated objective of addressing borderline anomalies and of overall simplification of the VAT system, and additionally achieve the separate policy objective of improving public health and decreasing obesity.  You do not address these factors in the impact assessment attached to the consultation and they are, of course, relevant considerations in the formation of public policy (see Annex A, page 39, here: http://www.bis.gov.uk/assets/biscore/better-regulation/docs/i/11-1112-impact-assessment-toolkit.pdf)

I don’t have any useful comments for you on self-storage or hairdressers chair rental except to say the legislation seems incredibly complicated to achieve a relatively simple distinction and I wonder whether a root-and-branch review of the complexity of VAT legislation wouldn’t be a better use of your time, but still….

Holiday caravans.

I wasn’t clear what the mischief was that you were trying to address here. Surely a static caravan is a house for these purposes in the same way that a holiday home is still a house?  It’s the “stays in one place and people live in it”-ness which is the determining factor rather than the “people don’t live in it for more than a few days”-ness, I would have thought.

If that’s the policy objective and this can be achieved by reference to a British Standard which applies, roughly speaking, to park homes then this looks relatively sensible to me.  (To the extent that any VAT legislation can be thought of as sensible, obviously!) But of course you need to be sure that you can live with the determinant being a British Standard – so if the standard is changed, would you have to revisit the legislation?

There also seemed to me to be a difference in emphasis between the consultation document chapter on Holiday Caravans and the impact assessment in the annex.  Perhaps I misread one or the other, but the impact assessment suggests “holiday static caravans” ARE to be subject to VAT, whereas I had the opposite impression from the chapter!

Alterations to listed buildings

There are then six pages in the consultation on changes to the rules around alterations to listed buildings.  My only comment on these is that I haven’t a clue what the current position is, why a change is necessary, and what the intended final position will be.  Nor can I see why it’s necessary to have legislation this complicated.

Kind regards

Wendy Bradley