UK ice cream manufacturers and sellers had urged Chancellor George Osborne to remove or reduce the VAT on ice cream.
The move came from the trade association in the face of swingeing increases in the cost of ingredients, energy price rises and the hike in VAT.
HM Revenue & Customs has informed The Ice Cream Alliance that the Chancellor’s hands are tied by EU law.
A spokesman said: “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, CEO of The Ice Cream Alliance, said: “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 which 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.
Source: Ice Cream Alliance
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