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VAT call for loss-leading drinks sales

Published:  03 March, 2010

The government has rejected a call for supermarkets to be barred from claiming back VAT on loss-leading alcohol sales.

SNP MP Stewart Hosie made the call in a written request to Chancellor Alistair Darling.

But Stephen Timms, financial secretary to the Treasury, dismissed the idea despite increasing political concern about below-cost retailing of drinks.

He said: "Businesses are entitled to reclaim the VAT on costs that relate to their business activities.

"There are therefore no grounds on which to take steps to prevent VAT being reclaimed by retailers in relation to marketing promotions of alcohol products, even if those are loss leading within the wider context of their business activities."