EU blocks ice cream VAT reduction bid

A campaign to reduce the cost of British ice cream has been thwarted by Brussels bureaucrats, according to the UK industry group The Ice Cream Alliance. UK ice cream manufacturers and sellers had urged British chancellor George Osborne to remove or reduce VAT on ice cream. The move came from trade association The Ice Cream Alliance in the face of swingeing increases in the cost of ingredients, energy price rises and the increase in VAT.

However, HM Revenue & Customs has informed the group that the chancellor’s hands are tied by EU law. A spokesman says: “It is not possible to completely remove VAT from ice cream. VAT is an EU-wide tax, the scope of which is set out in EU law under the terms signed by successive UK governments with our European partners. “These agreements do not allow the UK to extend the scope of its existing zero rates or introduce new ones.”

Zelica Carr, chief executive officer of The Ice Cream Alliance (pictured), says she was surprised to hear the government claimed it no longer had the power to determine domestic VAT matters. “The response from HMRC was disappointing. Whilst HMRC has advised that VAT is an EU-wide tax governed by EU Law – it is the UK government that has increased VAT on ice cream to 20%. Surely it must also have the power to reduce it. “I do appreciate that the country has fiscal challenges, and that is precisely why I raised this as an opportunity for the chancellor of the exchequer to give a much needed boost to the ice cream industry, and in doing so to help lift the spirits of the nation.”