Bakers will have no choice but to pass the VAT charged on hot pasties and pies onto customers, a north west London bakery has said.
Hot food sold by supermarkets and shops is likely to go up 20 per cent after the products became subject to VAT.
The government has come under fire from bakers who say it will damage their trade, while chancellor George Osborne was forced to admit he could not remember the last time he bought a pasty.
Peter Wenzel, chief executive of Wenzel’s the Bakers, believes the cost will ultimately be picked up by the consumer.
“Obviously we have to put it onto the consumer. We can’t take that increase, we are taking enough increases as it is and this is the final straw for the baker. We will pass it on to the consumer so it doesn’t cost us anything, although it’s more administration. But consumption could go down as a result and that doesn’t help us when we are trying to increase sales.”
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The government introduced the new rules in a bid to close a loophole which was discovered around 10 years ago. Bakers were able to claim they were exempt from VAT on hot food because they were not selling it straight from the oven, but putting it in a cabinet where it would come down in temperature.
Wenzel does not believe customers will be too happy about paying VAT on sausage rolls, even if they are already used to paying it on pizzas ordered from takeaway outlets.
“The difference between a pizza and a sausage roll is that a pizza is more a luxury type of good – say about £4 – and people have accepted they pay it on a pizza, but not on a sausage roll,” said Wenzel. “The government is trying to get revenue but I think they are choosing the wrong type of people, the consumer. Where will it stop – are they going to put VAT on bread?”
Despite being disappointed with the government’s decision to charge VAT on warm food from bakeries, Wenzel is optimistic about his company’s future expansion. Wenzel’s hopes to open around 20 more shops in the near future.
“We are doing very well, you can do deals in the high street with the landlords and we can offer them a sensible rent. We are finding things quite good out there and we are opening more shops. We can’t listen to the press and get bad vibes – let’s expand and create more employment,” he said.