Subway heads for the High Court over meatball sub

Another row over hot food is heating up for George Osborne. This time it's Subway's "splodgilicious sub with tasty meatballs".

Because this particular Subway sandwich is warmed up before being sold it's slapped with VAT at 20%. Not fair says Subway. Why should a hot sandwich be treated any different? So this meatball sub is heading for the High Court.

Hot, sticky legalities

Subway claims this sub needs to be heated up in order to comply with food safety legislation - something pasties, sausage rolls and other products don't need. So Subway has to charge the full 20% VAT. But 100 Subway franchisees are challenging the decision - and next month the case goes to the Upper Tribunal for tax in the High Court.

Subway may feel emboldened by Greggs, a huge opponent of Osborne's move to tax food on all hot takeaway food sold by bakeries. (Shares in Greggs rebounded significantly on the news after the Government performed a U-Turn on the issue.)

Crucially, Greggs claimed in its VAT fight it didn't have to re-heat food. Food such as sausage rolls or pies removed from the oven and allowed to cool down are tax-free. That may likely - again - be the critical factor for a judgement here.

Cool down: pasties vs sandwiches

"It is all to do with the cooling process", Shadid Sadiq told Herald Scotland, part of the family which owns one of Scotland's biggest Subway franchises, "but I'm not sure how different ours is from sausage rolls coming out of an oven. It is hard enough getting people in the door and spending in a recession but we are now going to have to consider putting up prices and passing this tax on to customers."

However, Subway and the Sadiq family may be taking heart too from other legal decisions on food. Roll back to 2007 and McVities won its battle to have its Jaffa cakes classed as cakes, not chocolate-covered biscuits, which were subject to VAT. McVitie's was able to prove that Jaffa cakes go hard when stale, rather than soft. Result - no VAT payable.

Budget winners and losers
See Gallery
Subway heads for the High Court over meatball sub

As of April 2013, the 50p rate will be reduced to 45p following a study which Osborne claims revealed it would make little or no difference to the amount of tax raised but would significantly reduce the damage to the economy. 

The much-debated cut to child benefit was confirmed, albeit through a less direct hit than was outlined in the pre-Budget report. The benefit will be removed gradually for those earning more than £50,000 – reducing by 1% for every £100 earned over the threshold, cutting off completely at the £60,00 mark. The Chancellor had planned to axe it where one parent earned over £43,000.

Financial service providers always refer to 'typical APR' in advertising to attract customers with favourable rates of interest.

Yet the typical APR on loans and credit cards is only available for those applicants who have a squeaky clean credit record, everyone else could end up with a much higher rate. For example, under EU rules, credit card providers only have to provide the typical APR advertised to 51% of applicants.

So always consider this when applying for accounts and products, and if approved – look out the actual APR that you will be charged.

A potential winner - Osborne particularly name-checked the South East in his Budget which many assume is a veiled reference to a Heathrow expansion.

The cost of a room in a care home in many parts of the country is now over £30,000 a year, according to figures from Prestige Nursing and Care. So even if the prime minister announces a cap on care costs - last year the economist Andrew Dilnot called for a new system of funding which would mean that no one would pay more than £35,000 for lifetime care - families will still face huge accommodation costs. Ways to cut this cost include opting for home care rather than a care home. Jonathan Bruce, managing director of Prestige Nursing and Care, said: "For older people who may need care in the shorter term, home care is an option which allows people to maintain their independence for longer while living in their own home and should be included in the cap." However, the only other answer is to save more while you can.

M 25-29, 32, 34-35, 38, 43, 45-46

A new stamp duty rate of 7% (up from 5%) will be introduced on properties worth over £2 million - widely considered a sop to the Lib Dems calling for a mansion tax. 

As was widely predicted, Osborne froze the fuel duty hike due in September 2013. He announced that his repeated scrapping of this duty has saved the average Ford Focus owner £7 on every tank of petrol.

Alcohol is on safe ground - for the moment. Duty will remain the same but do expect an announcement on alcohol pricing.

Duty will rise on all tobacco products by 5% above inflation, which will add 37p to a packet of cigarettes.

The Chancellor naming Wallace and Gromit caused quite a commotion on the Tory backbench and was possibly the most lively moment in the Chancellor's speech. The Chancellor is intent on keeping UK TV and film productions in Britain and will ramp up support to stop the exodus of British production companies abroad.


More stories

Read Full Story