VAT and hot food sales


At present the more you prepare food for consumption, the more likely the supply will be considered a supply of catering services and, therefore, standard rated supply for VAT purposes.
HMRC turned their nose up when an EU case recently came to a different conclusion. A German trader succeeded in having the supply of a hot sausage treated as a supply at a reduced rate rather than a catered supply which would have been subject to the standard rate in Germany.
HMRC continues to view food sold on a takeout basis as a standard rated supply. However a recent UK case has drawn a further distinction:
• Food sold and delivered hot, to be consumed hot, was held to be a standard rated supply, for instance a curry.
• Food sold and delivered hot as part of its preparation, but it is not necessary that they be consumed whilst hot, were considered to be a zero rated supply. For example naan breads, salads etc.
So affected traders could now consider that they are making a split supply, some standard rated, some zero rated.
Now may be a good time to check and make sure that you are not including VAT for the supply of takeaway goods that can now be treated as zero rated. These could also include:
• Cold sandwiches
• Cakes
• Biscuits (without chocolate covering)
• Milkshakes
• Frozen meals
• Yoghurt
Please contact us if you wish to discuss this in more detail.
Disclaimer – Please note: The ideas shared with you in this article are intended to inform rather than advise. Taxpayers’ circumstances do vary and if you feel that tax strategies we have outlined may be beneficial it is important that you contact us before implementation. If you do or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.