środa, 11 kwietnia 2012

Catering – Hot Takeaway Food and “Premises”

The changes announced to the VAT treatment of certain food items in last week’s Budget confirm that HMRC are now seeking to extend standard rating to food provided in the course of catering to the customer. This is in two situations:

- where food is sold at above ambient air temperature; and,
- where food is sold to be consumed in areas set aside for this, whether the seating/eating areas are provided solely by the producer of that food or if shared with customers of other food suppliers.

The reason for these proposed changes is stated to be due to a number of mainly successful challenges by businesses which would otherwise have to charge VAT on their sales of “hot takeaway food” or on food consumed outside their premises.

“Hot Food”
In particular, bakeries and supermarket outlets have been able to zero-rate their sales of products such as hot pies, hot meat products, toasted sandwiches, etc. This was primarily due to interpretation of the current VAT legislation, where food had been heated “for the purposes of enabling it to be consumed at a temperature above the ambient air temperature”. Many businesses successfully argued that the prime purpose of the heating was not for the food to be consumed at a particular temperature, but rather to comply with health and safety regulations and/or for appearance enhancement purposes.

Certain detrimental socio-economic effects are likely to be seen as a result of this change. These include:

- The imposition of VAT on certain basic foodstuffs at a time when retail prices are rising faster than average incomes.
- Increasing pressure on food producers by retailers who cannot pass on the (full) 20% increase to their customers and will be looking for considerable price reductions from their suppliers. This may cause businesses to fold as they will no longer be able to make a sufficient margin to survive.
- Encouraging businesses to keep the “ambient air temperature” of their outlets higher so that the temperature of “freshly baked food” is the same as or less than this.

The question arises as to how will HMRC define “freshly baked” bread? Would this include products requiring “bake off” by the retailer, as happens in many supermarket outlets currently, and flatbreads and similar staple bread items baked or otherwise created from a heating process pre-sale?

“Premises”
The definition of “premises” has also been clarified by HMRC. Currently, food (hot or cold) consumed on the premises on which it has been supplied is treated as being supplied in the course of catering and thus standard rated. However, the new definition includes food consumed in “any area set aside for the consumption of food by that supplier’s customers”, even if other suppliers’ customers can also use the area. This will cover food courts, tables and chairs outside restaurants and cafes, areas set aside for eating in airports, ports, railway stations, motorway service stations, theme parks, shopping centres, etc.

We ask:
- Would there again be a differential VAT treatment where there are public seating areas, e.g. wooden benches for the purpose of seating- rather than for the consumption of food – located closer to the retail outlet than any area designated for eating?
- How can the staff at such outlets easily identify where the customer will go to consume the items purchased, and thus the correct VAT treatment, once the customers have left the premises? It might be nearer (and cheaper!) for customers to return to their place of work to consume the food, e.g. an office located next to a sandwich shop, rather than to sit in a “general” eating area which may be some distance further.
- Will the term “premises” include the whole of an airport or theme park?
- Will HMRC introduce a “distance test” to determine how far a consumer must take their food purchases to have them treated outside the confines of “supplied in the course of catering”?

We await the outcome of the consultation process on this with interest. In the meantime, if you would like to discuss this further, please contact Marianne Hawksworth on 01962 735350.

http://www.thevatconsultancy.com/blog/tag/vat-on-food/

Food - HMRC

Food

HMRC Reference:Notice 701/14 (October 2011)

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(Download options for this document)

Foreword
1. Introduction
1.1 What is this notice about?
1.2 Who should read this notice?
1.3 What law does this notice cover?
The VAT Act 1994 of which:
2. General VAT liability rules
2.1 Food supplied in the course of catering
2.2 Food not supplied in the course of catering
2.3 What does ‘food of a kind used for human consumption’ mean?
2.4 Food processing services
3. General food products
3.1 Basic foodstuffs
3.2 Ingredients and additives used in home cooking and baking
3.3 Processed foods
3.4 Bakery products
3.5 Ice cream and similar frozen products
3.6 Confectionery
3.7 Drinks
3.8 Savoury snacks
4. Specialised products
4.1 General
4.2 Food supplements
4.3 Invalid foods
4.4 Diabetic and hypoallergenic products
4.5 Slimmers’ foods
4.6 Sports products
4.7 Food and drink for religious and sacramental use
5. Products used in commercial food manufacture
5.1 Introduction
5.2 Ingredients
5.3 Additives
6. Mixed supplies: mixtures, promotional linked items and packaging
6.1 Mixed supplies, including linked goods
6.2 Mixtures and assortments
6.3 Food packaging
Your rights and obligations
Do you have any comments?
Putting things right
How we use your information

You can zero-rate all supplies of unprocessed foodstuffs such as:

raw meat and fish;
vegetables and fruit;
cereals, nuts and pulses; and
culinary herbs,

whether you supply them direct to the public or for use as ingredients in the manufacture of processed foods, provided they are fit for human consumption.

Rates of VAT on different goods and services

If you're registered for VAT and you make VAT taxable supplies you'll have to charge VAT on them. Normally you charge VAT at the standard rate, unless the goods or services you are selling, and the circumstances in which you're selling them, mean you are allowed to charge a different rate.
There are different rates of VAT, depending on the type of goods or services your business provides. At the moment there are three different rates. They are:

standard rate - 20 per cent
reduced rate - 5 per cent
zero rate - 0 per cent

There are also some goods and services that are:

exempt - so no VAT is charged on them
outside the scope of the UK VAT system altogether

This guide lists certain goods and services that are reduced-rated, zero-rated, exempt or outside the scope of VAT. It's not a complete list and there may be conditions that must be met before a reduced rate can apply or before it can be accepted as exempt or outside the scope of VAT. Please see the 'More information' sections for further details.

On this page:

Different goods and services - and their VAT rate

The following sections list different goods and services that are reduced-rated, zero-rated, exempt or outside the scope of VAT. These rates may only apply if certain conditions are met, or in particular circumstances, depending on some or all of the following:

who's providing them or buying them
where they're provided
how they're presented for sale
the precise nature of the goods or services
whether you obtain the necessary evidence
whether you keep the right records
whether they are provided with other goods and services

Other conditions may also apply.
Before using anything other than the standard rate you should study the technical documentation carefully to find out what rate of VAT applies in any particular set of circumstances.
If you need more help with deciding on the right rate of VAT to charge you can contact HM Revenue & Customs (HMRC) for advice.
Contact HMRC to check the VAT rate is right
There are also specific VAT rules that apply to certain trades that affect how you account for VAT, and how much VAT you must pay and can reclaim.
Find out more about special VAT rules for different trade sectors
Find out more about different VAT rates

Food and drink, animals, animal feed, plants and seeds

Food and drink for human consumption is, in general, zero-rated but many items are standard-rated, including alcoholic drinks, confectionery, crisps and savoury snacks, supplies of food made in the course of catering including hot takeaways, ice cream, soft drinks and mineral water.
Because certain food and drink is zero-rated, so too are certain animals and animal feeds, and plants and seeds - if the animal or plant in question produces food that is normally used for human consumption.
More about food and drink in VAT Notice 701/14
More about animals and animal feed in VAT Notice 701/15
More about plants and seeds in VAT Notice 701/38

International trade

Goods exported outside the EU or sent to someone registered in another EU country are zero-rated, subject to conditions.
More about VAT on goods sent overseas

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http://www.hmrc.gov.uk/vat/forms-rates/rates/goods-services.htm

wtorek, 10 kwietnia 2012

What is an A3 license?

Class A3. Food and drink
Use for the sale of food or drink for consumption on the premises or of hot food for consumption off the premises.

Official Classification of Types of Property Usage in the UK

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