Morrisons has lost a VAT battle following a court ruling that its rotisserie chickens were hot food.

The grocery giant, which recently set out ambitious net-zero targets, has been hit with a £17m bill after losing a 13-year court fight against HMRC to stop VAT from being charged on its rotisserie chickens.

The UK high court ruled that whole cooked cool-down chickens should be subject to the standard 20% VAT rate for hot food.

The battle originates from changes brought in by former chancellor George Osborne’s “pasty tax” of 2012, with the Treasury implementing VAT on all hot takeaway food from supermarkets and bakeries.

Following public outcry, it retreated from its original proposal that food sold above “ambient temperature” should face the tax.

It went on to decide that VAT should be applied to items stored in a hot cabinet. Food products placed on a rack or to be sold cold or “incidentally hot” were exempt from the tax.

Morrisons has insisted that its rotisserie chickens should not face the tax since they are either eaten cold or reheated for dinner.

The court ruling, which took place on 11 December, highlighted that the supermarket sold its chickens in bags with foil lining with a “caution: hot product” label.

The judge concluded that HMRC had never provided specific rules regarding VAT and rotisserie chickens, and added that the retailer had not disclosed material information, including the fact that it removed it rotisserie chickens from sale after two hours, while they remained above ambient temperature.

Witnesses argued that a cooling chicken in a bag had a temperature of between 42 and 45°C after two hours. Without the bag, the product would be roughly 31.8°C.

Due to this, it was ruled that the rotisserie chickens would be more than “incidentally hot” when sold to customers.

Retail Gazette has contacted Morrisons for comment.

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