Monday 16 May 2016 12:03 am

Burrito costs are going up by 20 per cent – here’s why

The cost of producing a burrito is about to rise 20 per cent after a landmark tribunal hearing between a Mexican takeaway chain Chilango and HMRC.

Judge Barbara Mosedale – who has previously ruled that filling in online tax returns was a breach of religious rights in certain cases – agreed with HMRC that burritos were hot food, meaning that sales of them attract a VAT.

Sales of cold food do not attract the 20 per cent tax charge and it has been reported that as part of the case the judge even visited Chilango outlets, testing the temperature of Mexican staple cuisine.

The case had echoes of a ruling between HMRC and high street sandwich chain Subway and its toasted “Meatball Marinara” in 2014 which was also a success for the tax authorities.

"While a ruling in our favour would have been happily received, VAT has always been priced into our burritos from day one – so the ruling will not create any change to how our business has been run to-date," said Chilangon co-chief executive Eric Partaker. 

"The real issue will be for any other companies that have not been charging and paying VAT on their burritos."