In the case of WM Morrison Supermarkets v HMRC, the First-tier Tribunal (FTT) ruled that Morrisons’ rotisserie chickens were subject to VAT at 20% because they counted as a supply of catering.

How does VAT on food work?

Most food is zero-rated for VAT. However, catering is excluded from this, which means it’s usually taxed at 20%.

Catering includes hot takeaway food, but not cold food. The rules around what counts as “hot takeaway food” are quite specific and include food that is kept hot after cooking, such as under heat lamps or on hot plates or is sold in packaging designed to retain heat

This is why it’s possible to buy a hot pie or pasty without VAT – if it’s not cooked to order and isn’t kept warm, it can be zero-rated even straight out of the oven.

Food can also be standard-rated if it’s advertised or marketed as hot, regardless of its actual temperature.

What was the dispute?

HMRC issued VAT assessments totalling £17,034,932, arguing that Morrisons’ rotisserie chickens met the conditions for standard-rated VAT.

Morrisons appealed, claiming the chickens were cold takeaway food and should therefore be zero-rated.

What did the tribunal decide?

The FTT agreed that the chickens were not marketed or advertised as hot. However, it found that they were sold in heat-retaining packaging.

Although Morrisons argued that the plastic-lined bags were only meant to contain chicken juices, testing showed that:

• A wrapped chicken cooled by 47.06% over two hours
• An unwrapped chicken cooled by 62.59% over the same period

Because the packaging clearly helped the chickens stay warm, the tribunal concluded that they were hot takeaway food.

As a result, the chickens were treated as a standard-rated supply of catering, and VAT at 20% applied.

Why this matters

This case highlights how complex VAT rules can be, especially for food and takeaway items.

If you’re unsure whether VAT should be charged on your goods or services, please get in touch – we’ll be happy to help.