Morrisons Faces Seventeen Million Pound Tax Bill Over Rotisserie Chickens VAT Dispute

Morrisons has been handed a tax bill of seventeen million pounds after the High Court ruled its rotisserie chickens are subject to a twenty percent VAT rate. The British supermarket challenged the classification of its hot chickens, arguing that most customers consume them cold at home and the products should be zero rated. However, the judge determined that the chickens remain well above ambient temperature two hours post removal from hot cabinets and are not merely incidentally hot at the time of sale.

The ruling comes after a protracted legal dispute that began with the 2012 decision under then Chancellor George Osborne to apply VAT on all hot takeaway food. This was known at the time as the pasty tax. The Treasury later narrowed the measure to cover only products sold above ambient temperature. Under these adjusted rules, items like Greggs pasties were exempted, but HM Revenue and Customs clarified that rotisserie chickens would still fall within the VAT charge.

In its defence, Morrisons pointed to market research showing that sixty seven percent of its customers set four pounds fifty as the most they would pay for a cooked chicken. With the imposition of VAT, the retail price would rise to five pounds twenty eight, which Morrisons claimed could lead to a significant decline in sales and affect the entire supply chain as well as the affordability of balanced meals for families.

The supermarket highlighted that over eighty percent of customers take these chickens home to be eaten cold or reheated. The court referenced the foil lined bags used by Morrisons, noting they are designed more to prevent leakage of hot fluids and grease than to retain heat. Nonetheless, they contribute to heat retention, reinforcing the court’s view that the product is hot food when sold.

Morrisons had previously believed the chickens were zero rated for VAT purposes, but the High Court’s decision confirms they are liable for the standard charge. The company declined to comment on the outcome of the case.