Eat faces £2m 'pasty tax' tussle The retailer, which has in excess of 100 shops across the country, has been involved in a protracted battle with HM Revenue and Customs over VAT payments related to certain products. Details of its potential obligations are contained within its most recent accounts, for the year to June 2011, which show that the company has been trying to resolve the situation for three years before March's Budget, in which George Osborne decreed VAT would be chargeable on hot food sold by bakers. Although the accounts for Eat's holding companies do not provide full details, they reveal the tussle is over whether VAT was chargeable on "a product category" believed to be hot pies and other hot food. In July 2009, HMRC told the company it was seeking to reverse a previous decision on the matter, which in December 2008 had seen the retailer receive £519,249 back from the tax man. This was the result of an investigation into the company's sales over the prior three years. However, the latest accounts - signed off by directors on January 25, two months before the Chancellor announced the "pasty tax" - show that at June 30, 2011, the "potential VAT obligation is estimated to be £2m." A HMRC spokesman said it was not able to discuss individual cases. A spokesman for owners, Lyceum Capital, declined to comment.