Tom Parlon (Laois-Offaly, Progressive Democrats)

This recommendation is opposed. It refers to section 113, which deals with the Sixth Schedule of the Value-Added Tax Act 1972. This schedule lists goods and services that are liable at the reduced rate of VAT of 13.5%. The paragraph in question deals with hot food and drink purchased for consumption, whether at a take away outlet, a garage, a supermarket or elsewhere.

The purpose of the provision is to ensure that the sale of heated food and drink that is above the ambient air temperature when provided to the customer remains liable to VAT at the reduced rate when purchased at one of the outlets to which I referred. The provision arises as there was a recent challenge to the interpretation of the existing legislation. The provision does not change the position in regard to the charging of VAT on food and there is no issue of it being "snuck in". It does not change the situation but merely ensures that the rate applied since 1986 continues in the normal way.

The effect of the Senator's recommendation would be to zero rate hot foods sold for take away while leaving foods sold in a restaurants at the reduced rate. This would place restaurants at a competitive disadvantage. Revenue has estimated that a loss of €30 million would be incurred in the supermarket sector alone if the Government accepts the recommendation. In addition, the reference to "time of supply" in the current legislation has been amended to "time it is provided to the customer" to remove any ambiguity about the appropriate rate of VAT. If the food is hot when provided to the customer, VAT is charged at 13.5% irrespective of when the food is paid for. If the food is cold when provided to the customer, it does not fall within the provision.

There are no changes. This deals with an issue that was raised with the Appeals Commissioner and reappraises the situation since 1986.