Catering, takeaway food VAT Notice 709 1

The sandwich is zero rated and the crisps a subject to VAT at 20%. No, brownies are deemed to be cakes, and are zero rated whether they are chocolatey or not. Since HMRC’s classifications are subject to periodic updates, staying informed is vital. Engaging with a team of accountants like DS Burge & Co can provide invaluable VAT guidance, safeguarding against non-compliance risks. The nuances of VAT categorisation can sometimes become the centre of national attention.

Hot takeaway food and drink

Yes, unfortunately wine is subject to standard-rated VAT at 20%. Get your free guide, business plan template and cash flow forecast template to help you manage your business and achieve your goals. It’s a small price to pay to help fulfil your potential as a successful cafe owner. Ross Brown started Browns of Brockley in 2009 and has recently expanded from one coffee shop to three plus a mobile unit.

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But, some products are specifically listed as standard or zero rated by HMRC. Food and drink served hot that meet any one of the above five tests is subject to VAT. This includes catering for a wedding, delivery of ready-to-eat meals, or the provision of packed lunches. Adding to these illustrative cases is the ruling against Walkers regarding their Sensations Poppadoms.

1 The ordinary meaning of catering

Over the years I’ve noticed that few business owners truly grasp the concept of the balance sheet. It’s worth segregating rent and rates from other business costs that need your attention. Since then, businesses over a certain size have had to submit tax returns digitally. Most businesses already submit tax returns digitally – https://www.bookstime.com/ using software like Xero – so I recommend signing up for Making Tax Digital whatever the size of your business. You have huge fit-out costs and need to reclaim VAT now rather than later. This is a valid but short-sighted approach, since you can normally claim VAT on fit-out costs at a later date when you eventually register.

• These estimates are robust to alternative specifications and can be useful to other countries considering to broaden their VAT base by taxing basic groceries.
• The detailed list of products eligible for these preferences is outlined in Chapter VI of the Romanian VAT Law (Article 42 et seq.).
• The IOSS registration is valid for all distance sales of imported goods to buyers in the EU and came into use for goods sold from July 1, 2021.
• The VAT rate applied primarily depends on whether food and drink are consumed on the premises or taken away.
• All businesses must keep records of all their spending and transactions, under the Companies Act 2006.

Meanwhile, taxable supplies include both goods and services that you have to pay VAT or other taxes on. In other words, the whole experience of drinking out is a taxable transaction. When HMRC refer to drinks served as part of a catering that covers everything from a wedding catering company to a pub to a fast food joint. For any drinks that you’re served with the intention of drinking them in a communal area, VAT will be charged as part of the total value of the dining experience. You could categorise other fixed costs under rent, rates, utilities, services, insurance, technology, office equipment and restaurant equipment. But you could, for example, break down cost of sales into food ingredients, drink ingredients, other retail, packaging and other direct expenses.

Around the world, governments have stirred up a variety of ways to tax your morning brew. Below, we’ll spill the beans on how different countries treat VAT on coffee. This isn’t an exhaustive list and businesses in the space should consider consulting experts to better understand the tax arrangements applicable to their supply chain. Tills must also be appropriately programmed to add VAT accurately for each item scanned. Maintaining an up-to-date product catalogue listing all food and drink lines by VAT treatment is best practice.

The new VAT e-commerce rules abolished the 22-euro VAT exemption as of July 1, 2021. Therefore, from July 1, 2021, all commercial goods imported into the EU from a third country, for example the U.K., are subject to VAT irrespective of their value. Sarah Shears of Andersen reviews the wide-ranging and complex rules introduced in the EU VAT e-commerce package and considers the practical effect they will have for domestic and international sellers. You may also be able to get a VAT refund If you export drinks outside the UK or EU via the VAT export scheme.

• When it comes to VAT on drinks, businesses in the beverage industry need to stay on top of when to apply and not apply VAT so they don’t find themselves in hot water with HMRC.
• But behind the grind, a thorough understanding of finance is essential to making it a long-term success.
• Packaging simply to contain, protect and promote the food it contains, is considered part of the supply of the food inside it, rather than a supply in its own right, and takes the same liability as its contents.
• Subject to the next paragraph, if the answer to any of these questions is ‘yes’, your supplies are standard-rated supplies in the course of catering.
• Some drinks that are taxable goods include alcoholic beverages and sports drinks.
• The selling of these products is now subject to VAT on the standard rate.

VAT on meal deals, discounts or mixed rate sales?

• This distinction is crucial for cafes when determining the correct VAT to charge.
• If you’re a frequenter of coffee shops (and let’s face it, who isn’t these days?), you’ll be well used to the barrage of questions that follows almost every order.
• If you’re not the person who linked the goods — for example, you are a wholesaler or retailer who received them already linked as a package — you may be unsure whether these conditions have been met.
• HMRC does not accept that the decision has any implications for UK taxpayers – see VFOOD4120.
• When choosing an accountant, look for one who has specialist experience working with cafés and is prepared to work with you long-term to understand your needs and aspirations fully.

‘Advertised or marketed in a way that indicates that it is supplied hot’ does not include advertised or marketed as ‘freshly baked’. This means that you must account for VAT on any supplies of catering or hot takeaway food. You can reclaim any VAT charged to you as input tax, subject to the normal rules.

The training of staff must be overly done as this can become a reason for the high turnover rate of the staff in your sector. This is because during the investigation of HMRC, if mistakes are found, you will have to deal with hefty VAT  bills at the end of the day. Cash is an asset, and most assets are either purchased for cash – like fixed assets – or convert into cash – like money-owed-by-customers, which goes by the names trade debtors or accounts receivable.

Lower VAT rates for coffee under VAT OSS in selected EU countries

Colombia’s coffee is primarily exported, and no VAT is charged on such transactions. But if you’re selling or buying locally, a 19% VAT rate applies. Nevertheless, numerous exceptions exist within VAT regulations, and not all items that require additional preparation by the customer will be automatically zero-rated. It’s vital to coffee shop accounting acknowledge that each EU country may have specific conditions for implementing reduced VAT rates. Additionally, legislation in different countries might introduce new VAT rates based on economic conditions. Therefore, staying informed about changes in the countries where goods are sold or seeking advice from an expert is crucial.