Morrisons get its fingers burnt after losing £17 million hot food VAT battle with HMRC

Dezember 17, 2025 Allgemein

UK supermarket chain Morrisons has lost a long-running UK High Court case against HM Revenue & Customs (HMRC) over whether its rotisserie chickens should attract standard VAT or not. The verdict, handed down 16. December 2025, leaves Morrisons with a whopping £17 million VAT bill.

The dispute goes back to the controversial “pasty tax” changes introduced in 2012, which aimed to apply the standard 20% VAT to hot takeaway food. Despite pushback at the time (and exemptions for some items), rules were tightened to say that food sold above ambient temperature could be taxable.

Morrisons argued its chickens should be zero-rated because:

  • Most customers ate them cold or reheated them at home, and
  • They weren’t sold as hot takeaway food in the traditional sense.
 What the Court Decided

 Once the evidence was laid out, the court ruled that Morrisons’ rotisserie chickens meet the legal definition of hot food for VAT purposes due to the following;

  • Chickens were sold above ambient temperature and not merely warm as a by-product of cooking.
  • They were held in heated units and packaged in foil bags marked “Caution: hot product.”
  • Evidence showed they were kept hot for up to two hours after cooking and then removed or disposed of if not sold.

For the court, this wasn’t a lukewarm issue as the food was sold above ambient temperature at the point of sale which the court emphasised was the key factor rather than how customers consume it later.

This interpretation aligns with the “pasty tax” rules introduced in 2012, which apply standard 20% UK VAT to hot takeaway food. That means that rotisserie chickens meet the legal definition of hot food for VAT purposes and standard UK VAT should have been charged.

Why This Matters

 Apart from a substantial bill now owed by Morrisons, the ruling also highlights the complexity of UK VAT rules on food, which have sparked similar disputes over Jaffa cakes, flapjacks and more.

Supermarkets may need to rethink labelling, storage, and packaging for ready-to-eat items to avoid future challenges.

From a VAT perspective, this ruling isn’t just about chickens but moreover the consistent application of VAT principles on food, especially when items sit in a grey area between takeaway and “ambient food”, and when packaging and display affect temperature claims.

The case could influence how supermarkets label and store ready‑to‑eat foods going forward, and whether similar products might face challenges from tax authorities.

Schlussfolgerung

 If you sell hot or ready-to-eat food, it may be time to do another review of your VAT classifications. This case shows HMRC is prepared to pursue disputes aggressively and courts will look closely at temperature, packaging, and presentation.

Need help in reviewing your businesses VAT rules? Contact our team today for a compliance review and avoid costly surprises.

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