Food and Catering
Food is zero rates, however, a supply of food is in the course of catering is standard-rated. Thus sandwiches, cakes etc which are normally zero-rated are standard rated if supplied in the course of catering.
When deciding whether a supply is in the course of catering all factors need to be considered with no single factor decisive. Generally however catering is associated with a broader activity in which the food is accompanied by an additional element, usually of service or facilities which add to the experience. Sales of food from the shop, including delivered food, do not therefore constitute a supply of catering.
A supply is in the course of catering and therefore standard-rated if it is supplied for consumption on the premises on which it is supplied. The meaning of premises for these purposes from 1 October 2012 includes any area set aside for the consumption of food by that suppliers customers, whether or not the area may also be used by the customers of other suppliers.
Hot take-away food
Hot take-away food is a standard-rated supply in the course of catering. From 1 October 2012, “hot food” means food which (or any part of which) is hot at the time it is provided to the customer and —
(a) Has been heated for the purposes of enabling it to be consumed hot,
(b) Has been heated to order,
(c) Has been kept hot after being heated,
(d) Is provided to a customer in packaging that retains heat (whether or not the packaging was primarily designed for that purpose) or in any other packaging that is specifically designed for hot food, or
(e) Is advertised or marketed in a way that indicates that it is supplied hot.
Something is “hot” if it is at a temperature above the ambient air temperature.
Something is “kept hot” after being heated if the supplier stores it in an environment which provides, applies or retains heat, or takes other steps to ensure it remains hot or to slow down the natural cooling process.
The practical impact of this change is that from 1 October 2012 goods which are sold to be consumed hot (hot bacon rolls) or goods heated to order (toasted sandwich) for consumption off the premise remain standard rated.
Where goods are freshly baked (e.g. sausage rolls) they will remain zero rated after 1 October 2012 unless the trader makes any effort to keep them hot. For example, if the freshly baked sausage rolls are taken out of the oven and left on a heat rack then their sale will be standard rated as the trader is keeping them hot. If they are left on an unheated rack to cool naturally then they can be zero rated even if they are above the ambient room temperature when sold.
Other take-away food
- Chocolate bars and crisps are standard-rated.
- Soft drinks, bottled water and smoothies are also standard-rated.
- Cakes & bread are zero-rated. Commemorative cakes are also zero-rated provided no further part is taken in the provision of catering or delivery to the customer to set up.
- Cold sandwiches and chilled meals are zero-rated.
- Meal deals are a mixed supply and the price may be apportioned since the individual items can be purchased and enjoyed separately.
The provision of catering for no consideration to employees is a supply at nil value and no VAT is due. If a charge is levied VAT is levied at the standard or zero rate according to the nature of the supply.
If a tip is discretionary, then it is not liable to VAT as it is not seen as being in respect of a supply. Compulsory service charges will attract VAT. If your bill invariably shows a service charge uplift, then VAT will be due, unless you can demonstrate that it is genuinely discretional.
Jeffs & Rowe