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The Supreme Court has rejected arguments by an Irish Subway franchisee that it is not subject to VAT on some of its take-out products, including heated teas, coffees and filled sandwiches.
The appeal by Bookfinders Ltd, based in Tuam, Co Galway, included consideration of whether the bread used in Subway sandwiches fell outside the legal definition of bread which, under the 1972 VAT Act, is intended to attract a VAT rate. zero.
The five-judge court ruled that bread falls outside that legal definition because it has a sugar content of 10 percent of the weight of the flour included in the dough.
Ingredients
The law states that the weight of ingredients such as sugar, fat, and bread improver will not exceed 2 percent of the weight of flour in the dough.
The clear intent of the detailed definition of “bread” in the Act was to distinguish between bread as a “staple” food, which should have a zero percent rating, and some other baked goods made with dough, said Judge Donal O ‘ Donnell. .
Because heated Subway sandwiches, such as a hot meatball sandwich, did not contain “bread” as defined, it cannot be called “food” for purposes of the Act, he argued.
The appeal from Bookfinders, whose trade is between 70% and 80% to-go, stemmed from a 2006 Revenue decision that denied the company a refund for VAT payments made between early 2004 and late 2005.
Bookfinders claimed a refund claiming that it was subject to VAT at a compound rate of 9.2 percent when, it argued, the rate should have been zero percent.
After an appeals commissioner confirmed Revenue’s denial, the company went to Superior Court. There he lost, and also lost on appeal to the Court of Appeal, but the Supreme Court agreed to hear a new appeal due to issues relating to the construction of the 1972 Act.
Appeal
The case focused on two paragraphs of two lists of the Law relating to exceptions to the VAT rate of 21 percent for certain goods and services, with the effect that they will apply to VAT rates of 13.5 percent or zero percent. Bookfinders claimed that much of its turnover should be charged at zero percent.
Judge O’Donnell, in a ruling Tuesday, dismissed the appeal. While describing some of the arguments presented on behalf of Bookfinders as “ingenious,” he agreed with the appeals commissioner that hot beverages, including tea and coffee, and sandwiches were included in the sixth program of the Act. 1972 and therefore were subject to taxes of 13.5%. . It rejected claims that hot brewed tea and coffee fell below the zero percent rate and that only cold tea and coffee, which had been heated, were below the 13.5 percent rate. hundred.
It was “entirely understandable” that the legislature wanted to apply a zero rate to teas and coffees when they were retailed, but to apply the intermediate VAT rate in the context of, for example, takeout.
The Appeals Commissioner also correctly held that Subway’s heated sandwiches were not subject to the zero percent rate, it ruled.
Based on these and other findings, the appeal was dismissed.
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