FINALLY, The Supreme Court has found that the bread in Subway's
heated sandwiches has too much sugar in it to meet the legal definition of
being bread.
The court ruled that with a high sugar content, the sandwich
could not be deemed a staple food which attracts a zero VAT rate. It rejected
arguments by a Subway franchisee that it was not liable for VAT on some of its
takeaway products, including teas, coffees and heated filled sandwiches.
The appeal by Bookfinders Ltd, based in Tuam, Co Galway,
included consideration of whether the bread sold in Subway sandwiches fell
outside the statutory definition of bread intended under the Value-Added Tax
Act 1972 to attract a zero VAT rate.
The five-judge court ruled the bread in Subway's heated
sandwiches falls outside that statutory definition because it has a sugar
content of 10pc of the weight of the flour included in the dough.
The act provides the weight of ingredients such as sugar, fat
and bread improver shall not exceed 2pc of the weight of flour in the dough.
The clear intention of the detailed definition of
"bread" in the act was to distinguish between bread as a
"staple" food, which should be 0pc rated, and certain other baked
goods made from dough, Mr Justice Donal O'Donnell said.
Because the Subway heated sandwiches, such as a hot meatball
sandwich, did not contain "bread" as defined, it could not be said to
be "food" for the purpose of the Second Schedule of the Act, he held.
The appeal by Bookfinders arose from a 2006 decision by the
Revenue Commissioners refusing it a refund for VAT payments made between early
2004 and late 2005.
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