Victims of the pasty tax: Creditors to collapsed West Cornwall Pasty Company out of pocket to tune of £7m

By SARAH BRIDGE, FINANCIAL MAIL ON SUNDAY

Updated: 05:22 EST, 30 June 2014

Creditors to the collapsed West Cornwall Pasty Company are out of pocket to the tune of £7 million, auditors say.

The company called in administrators in April after recording falling sales and rising losses. The failure was blamed in part on the ‘pasty tax’ introduced in 2012, which made hot takeaway food sold by bakeries liable for VAT.

Of the 65 stores, 35 were bought by the Enact fund, whose investors include former Leeds United footballer Danny Mills.

Collapse: The company called in administrators in April after recording falling sales and rising losses

The buyout saved 274 jobs but the rescued part of the firm has no obligation to pay the debts left by the former business, including money owed to suppliers, utility firms, landlords and, ironically, nearly £1 million to the Treasury in unpaid VAT and National Insurance contributions.

While the Treasury will be left empty handed, firms working with the new entity are likely to recover some of the money owed.

Last year, boss Stephen Gipson said sales were ‘overshadowed by the introduction of a standard rate of VAT’.

Administrator David Chubb of PwC said: ‘Unfortunately there wasn’t a lot of value realised in the sale, but selling part of the business as a going concern meant a lot of jobs were saved and shops kept open, which was important.’