Industry Sector: Sandwich Bar

You will have to register for VAT if your taxable sales are likely to be above the current VAT threshold. You will then have to charge VAT on some of the goods you sell - this is known as 'output tax'. You will be able to reclaim any VAT you pay on purchases - this is known as 'input tax'.
Every quarter you will send off to HM Revenue & Customs (HMRC) the difference between:

• the output tax you have charged, and
• the input tax you have paid on your purchases

HMRC allows you some time at the end of each quarter before you have to send off the VAT due. So, for example, the VAT due on sales made in months one, two and three would be sent off at the end of month four.
Businesses that are having trouble making their VAT payments, or are worried that future payments will cause them problems, can ask for help from the HMRC Business Payment Support Service. If your business needs this financial assistance to tide it over, HMRC will look at your situation and discuss temporary options that could help out. These could include letting you make payments over a longer period and waiving late payment surcharges. To discuss payment problems with HMRC you can call the Business Payment Support Service Helpline on 0845 302 1435.

Standard or zero rated?

You are likely to sell a mixture of standard rated and zero rated things. Standard rated goods have VAT of 20% added to the selling price while zero rated goods do not have to have any VAT added to the selling price.
Zero rated items include cold takeaway food and sandwiches. Standard rated items include:

• all hot takeaway food and drink
• all food and drink supplied to be eaten on the premises
• food and drink supplied for catering
• items such as snacks, soft drinks, confectionery and so on

You can contact the VAT Helpline on 0845 010 9000 to request further guidance. There are two helpful publications which they can supply free of charge. These are VAT Notice 709/1 Catering and take-away food and VAT Notice 701/14 Food. Business Brief 09/05 VAT - Hot take-away food sets out HMRC policy on the VAT treatment of hot take-away food following a number of VAT Tribunal decisions. You can also download VAT publications from the HMRC website.
Your market research will have helped you to estimate your sales income every month. Now decide what proportion of those sales might be of standard rated items so that you can estimate approximately how much VAT you will send off to HMRC every quarter.
You will need to:

• clearly label your sandwiches with the eat-in (VAT inclusive) price and the takeaway price
• make sure that the till you buy can separate the standard rated sales from the zero rated sales