It is no secret that the hospitality sector is one of the hardest hit by the current Coronavirus crisis and the associated lockdown and social distancing measures. These challenging times have led to numerous operators adapting their businesses in order to maintain some revenue despite being unable to trade conventionally. Practically, this may mean offering meals for collection by customers, meals being delivered for immediate consumption, pre prepared meals being delivered for cooking or freezing at home, or a combination of these options.
More positively these new ways of operating may bring with them the opportunity to achieve cash flow advantages from a VAT perspective by increasing margin, which will undoubtedly be welcome at such a challenging time. As such we would welcome the opportunity to speak with any businesses who are changing their operations to respond to the restrictions they must now operate under.
Some of the key considerations are as follows:
Within commercial constraints, what is the most VAT-beneficial means of supplying food and drink to customers – delivery, collection, ingredient boxes with recipes and so on?
How should delivered or takeaway meals be packaged?
How should the promotional or marketing material reflect the new means of operating to support any beneficial VAT treatment?
How should offers or meal-deals be priced and held out for sale from a VAT perspective?
With careful planning and practical advice, as HMRC is extremely focussed on such matters, it may be possible to achieve valuable cash benefits and increased margins. Our experienced team of tax consultants are well placed and ready to assist you in this area, so please get in touch with Alex Nicholson, VAT Director or one of the tax team local to you.
For more information or to discuss potential tax opportunities for your business, please contact Emma Forrester, VAT and Indirect Tax Manager via email emma.forrester@armstrongwatson.co.uk or call 01228 690192.
