If I’ve understood Radio 4’s piece on this this morning correctly, it’s about shutting a tax loophole and levelling the playing field for everyone that sells hot food.
Currently if you can think of a reason to heat your take-away food that sounds sufficiently plausible that is not “because this is better served hot” then you don’t charge VAT on the supply.
So for example, “the main reason we heat our pies up is so they smell nice and bring customers in” means that someone might not be charging VAT, when the reality is that a minced beef and onion pie doesn’t taste anywhere near as good cold and therefore you wouldn’t sell (as many) cold ones.
If you can afford to argue the point (ie you are a large multiple) then you stand a better chance of not having to ultimately charge VAT (and you can afford to take the commercial risk of not charging it in the first place and having to settle up with HMRC later).
A sole trader/smaller business without the same negotiating clout with HMRC will have to charge the VAT making them less competitive as they can’t afford to lose a tribunal on it.
Arguably this is good for smaller traders as it puts them on a safer and more equal footing as they’re more likely to already be charging the VAT so won’t see their margins hit.