The Court of Appeal has delivered judgment in Sub One, the case about VAT on hot takeaway food. HMRC, represented by Owain Thomas, persuaded the Court of Appeal to uphold the judgment of the Upper Tribunal, which dismissed the appeal brought by Sub-One, represented by Philippa Whipple QC and Isabel McArdle.

Sub-One is a former Subway franchisee. It complained that it was treated unfairly when it was required to pay VAT on its sales of toasted sandwiches, when other competitors were allowed to zero-rate their similar products. This inequality of treatment, so it argued, stemmed from the legislation or from the relevant case law or from the consistent practice adopted by HMRC in applying an impermissible test for determining whether toasted sandwiches were heated “for the purpose” of being consumed hot. The Court of Appeal found that the legislation had indeed historically been interpreted in a manner contrary to the EU law requirement of objectivity but concluded that the legislation was capable of being applied in a manner which complied with EU law. It concluded that Sub One could not claim the tax benefits which had been obtained by competitors since those cases had been incorrectly decided. The Court said it had found the case difficult, but declined to make a reference to the Court of Justice in Luxembourg.

Sub One is seeking permission to appeal to the Supreme Court. There are 1,200 other appeals standing behind Sub-One’s appeal.