Morrisons handed £17m ‘pasty tax’ invoice over rotisserie rooster baggage

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Your assist makes all of the distinction. Learn extra Morrisons is dealing with a considerable £17 million tax demand from HMRC, stemming from a dispute over the kind of paper baggage used for its common rotisserie chickens.

The grocery store was issued a invoice for £17,034,932 in 2021, with tax authorities asserting that the store-cooked birds are topic to twenty per cent VAT.

This ruling falls below controversial "Pasty Tax" laws, launched by David Cameron's Conservative authorities in 2012.

The excessive road chain initially believed it had averted the new meals levy, which sparked widespread public and trade outcry upon its introduction. Supermarkets and bakers, together with Greggs, had warned that extra prices could be handed on to customers.

The backlash prompted an modification to the tax guidelines, stipulating that sizzling meals cooked however then allowed to chill naturally could be exempt.

Morrisons contends {that a} 2013 tax inspection of its rotisserie operations concluded that its preparations – chickens cooked and introduced to clients in paper baggage far from the cooking space – "appeared acceptable" to keep away from the new meals tax.

<img src="https://static.independent.co.uk/2025/08/21/13/37/morrisons.png" srcset="https://static.independent.co.uk/2025/08/21/13/37/morrisons.png?quality=75&width=320&crop=3%3A2%2Csmart&trim=63%2C0%2C107%2C0&auto=webp 320w, https://static.independent.co.uk/2025/08/21/13/37/morrisons.png?quality=75&width=640&crop=3%3A2%2Csmart&trim=63%2C0%2C107%2C0&auto=webp 640w" loading="lazy" alt="Morrisons now owes $17m to HMRC" class="sc-1mc30lb-0 ggpMaE inline-gallery-btn"/> open picture in gallery

Morrisons now owes $17m to HMRC (Getty/iStock) However in 2021, HMRC mentioned that as a result of Morrisons' chickens had been offered in greaseproof paper baggage with insulating or moisture resistant qualities, they had been liable to be taxed at the usual fee, handing the grocery store the large invoice masking January 2017 to July 2020.

The chain appealed towards HMRC's ruling, arguing that for tax functions its chickens weren't precise sizzling meals however merely “by the way sizzling”. It claimed it had been given a "authentic expectation" by the 2013 inspection that it was complying with the foundations.

Legal professionals argued that it could be unfair for the grocery store now to be ordered to pay enormous backdated tax payments for its rotisserie birds.

However Choose Mark Baldwin, sitting within the Tax Tribunal, has now dominated towards Morrisons, saying that HMRC was proper to make the demand.

He mentioned: "Morrisons, which operates a widely known grocery store chain, appeals towards a lot of assessments ... on account of HMRC’s determination that the sale of entire cool-down rotisserie chickens within the quarterly VAT durations January 2017 to July 2020 is liable to VAT at the usual fee. The whole quantity of VAT in concern is £17,034,932.

"Morrisons argues that HMRC gave clear and unambiguous rulings in 2012-2014 that cool-down rotisserie chickens had been zero-rated. Morrisons says that it had a authentic expectation that it may depend on these rulings, that it in reality relied on these rulings for over a decade and that it could be unfair and an abuse of energy for HMRC to have the ability to resile from these rulings retrospectively and assess for previous durations.

"Morrisons [says it] put all of its playing cards face up on the desk by proactively inviting HMRC to conferences to debate the right VAT ranking for cool-down rotisserie chickens and, explaining the background and idea behind cool-down rotisserie chickens, Morrisons then proceeded to ask HMRC officers to contemplate and make clear HMRC’s place ... by visiting an area retailer, analyzing the merchandise on sale and reviewing the signage."

<img src="https://static.independent.co.uk/2023/06/19/09/89452f6ac29f6da147ebc7c9438225c5Y29udGVudHNlYXJjaGFwaSwxNjg3MjQ4MzE0-2.54242309.jpg" srcset="https://static.independent.co.uk/2023/06/19/09/89452f6ac29f6da147ebc7c9438225c5Y29udGVudHNlYXJjaGFwaSwxNjg3MjQ4MzE0-2.54242309.jpg?quality=75&width=320&auto=webp 320w, https://static.independent.co.uk/2023/06/19/09/89452f6ac29f6da147ebc7c9438225c5Y29udGVudHNlYXJjaGFwaSwxNjg3MjQ4MzE0-2.54242309.jpg?quality=75&width=640&auto=webp 640w" loading="lazy" alt="Morrisons argued its chickens were not hot food but only ‘incidentally hot’" class="sc-1mc30lb-0 ggpMaE inline-gallery-btn"/> open picture in gallery

Morrisons argued its chickens weren't sizzling meals however solely ‘by the way sizzling’ (PA Archive) Through the listening to, legal professionals for Morrisons argued that it "couldn't have been extra open" about its chickens and that an HMRC officer had noticed cool-down rotisserie birds on show in-store on at the very least 4 events and had witnessed them being roasted, taken out of the rotisserie and bagged, labelled and displayed instantly.

Chickens had been ready, displayed, packaged and marketed in the identical approach since HMRC had given approval for them to be zero-rated, the corporate claimed.

In these circumstances, HMRC's makes an attempt to cost VAT retrospectively had been "manifestly unjust" after a decade of compliance with rulings and steering and could possibly be "crippling for a skinny margin enterprise", the grocery store firm argued.

However the decide mentioned that the image painted by the grocery store large didn't absolve it of the duty to pay its tax invoice.

He mentioned that when the HMRC inspector appeared on the rooster in 2013, "his understanding ... is that they had been 'packaged in plain baggage, left to chill naturally and made out there for self-selection by clients from desk sort shows within the aisles'".

Nevertheless the officer had crucially "thought that the rooster paper baggage had been plain paper, and subsequently non-heat retentive, baggage", which was not the case, he continued.

<img src="https://static.independent.co.uk/s3fs-public/thumbnails/image/2019/08/07/09/chicken.jpg" srcset="https://static.independent.co.uk/s3fs-public/thumbnails/image/2019/08/07/09/chicken.jpg?quality=75&width=320&auto=webp 320w, https://static.independent.co.uk/s3fs-public/thumbnails/image/2019/08/07/09/chicken.jpg?quality=75&width=640&auto=webp 640w" loading="lazy" alt="Lawyers for Morrisons argued that the supermarket ‘could not have been more open’ about its chickens" class="sc-1mc30lb-0 ggpMaE inline-gallery-btn"/> open picture in gallery

Legal professionals for Morrisons argued that the grocery store ‘couldn't have been extra open’ about its chickens (Getty Photographs/iStockphoto) "We all know that the rooster paper baggage, though not designed to retain warmth, are warmth retentive and, way more importantly, are designed to forestall the leakage of sizzling fluids and grease," he mentioned.

"It's not [the HMRC officer's] job to attempt to work out the properties of the rooster paper baggage even when a non-expert may work out how warmth retentive these baggage had been simply by them.

"As late as 2021, Morrisons had been telling HMRC that the rooster paper baggage weren't warmth retentive, when, as [Morrisons' then finance Director Richard] Nichols readily acknowledged in cross-examination, this was simply not true.

"The overwhelming majority of sizzling takeaway meals is normal rated. Promoting sizzling chickens in packaging designed to retain fluids and grease is enough by itself for the chickens to be normal rated.

"Morrisons didn't make full disclosure of all materials info. Particularly, Morrisons did not disclose the warmth and grease/fluid retention options of the rooster paper baggage," the decide concluded, upholding the taxman's determination and confirming the £17m invoice.

The decide added that, along with these proceedings, Morrisons has utilized to the Excessive Court docket for permission to use for judicial overview over the rooster tax row.

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Morrisons handed £17m ‘pasty tax’ invoice over rotisserie rooster baggage

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