A quick guide to VAT on Sandwiches, Takeaway Food, Cakes and Pasties 14


Most takeaway and sandwich shops are not part of the big chains like Greg’s, McDonalds or Subway, they are just small businesses doing their best to comply with complicated and confusing VAT rules, here is a quick summary to help those businesses account for their sales. Basically by using keeping 3 separate receipt books it will make it easier for their accountants to calculate the VAT, rather than a single takings book which almost inevitably means making estimates of the split between zero rates and vatable.

 

 

The rules are in HMRC Notice 709/1

So what changed in the Budget 2012

Food is subject to VAT once it is heated to “above air-ambient temperature”, and meant to be eaten in or near the shop or restaurant. So “takeaway food” is already subject to VAT, while most hot food sold by bakers and supermarkets is exempt as it has been heated to improve its appearance (ie it could equally be enjoyed cold); or it will be eaten at home.The aim of the change is therefore to “clarify the definition of ‘hot takeaway food’ to confirm that all food (with the exception of freshly baked bread) that is above ambient temperature when provided to the customer is standard [VAT]-rated”.

http://www.guardian.co.uk/lifeandstyle/2012/mar/28/pasty-tax-pie-budget

VAT can be very complicated as highlighted in the case of Jaffa Cakes – Cakes or Biscuits?

The leading case on the borderline is that concerning Jaffa cakes: United Biscuits(LON/91/0160). Customs and Excise had accepted since the start of VAT that Jaffa cakes were zero-rated as cakes, but always had misgivings about whether this was correct. Following a review, the department reversed its view of the liability. Jaffa cakes were then ruled to be biscuits partly covered in chocolate and standard-rated: United Biscuits (as McVities, one of the largest manufacturers of Jaffa cakes) appealed against this decision. The Tribunal listed the factors it considered in coming to a decision as follows.

  • The product’s name was a minor consideration.
  • Ingredients:Cake can be made of widely differing ingredients, but Jaffa cakes were made of an egg, flour, and sugar mixture which was aerated on cooking and was the same as a traditional sponge cake. It was a thin batter rather than the thicker dough expected for a biscuit texture.
  • Cake would be expected to be soft and friable; biscuit would be expected to be crisp and able to be snapped. Jaffa cakes had the texture of sponge cake.
  • Size: Jaffa cakes were in size more like biscuits than cakes.
  • Packaging: Jaffa cakes were sold in packages more similar to biscuits than cakes.
  • Marketing: Jaffa cakes were generally displayed for sale with biscuits rather than cakes.
  • On going stale, a Jaffa cake goes hard like a cake rather than soft like a biscuit.
  • Jaffa cakes are presented as a snack, eaten with the fingers, whereas a cake may be more often expected to be eaten with a fork. They also appeal to children, who could eat one in a few mouthfuls rather like a sweet.
  • The sponge part of a Jaffa cake is a substantial part of the product in terms of bulk and texture when eaten.

Taking all these factors into account, Jaffa cakes had characteristics of both cakes and biscuits, but the tribunal thought they had enough characteristics of cakes to be accepted as such, and they were therefore zero-rated.

http://www.hmrc.gov.uk/manuals/vfoodmanual/vfood6260.htm

Surely there must be a way to simplify the rules?

steve@bicknells.net

14 comments

  1. This is a recurring problem, some businesses will always try to find a way around rules. Over the years situations change. The new rules include communal seating areas in shopping malls. Many years ago I presented a “food premises” case to Tribunal involving a country park ( Mylos of Reading) which determined that the whole park was premises.
    VAT is constantly changing so if in doubt please ask.

  2. Magnificent goods from you, man. I have remember your stuff previous to and you’re just too magnificent. I actually like what you’ve got here, certainly like what you are saying and the best way through which you say it. You are making it enjoyable and you still take care of to keep it wise. I can not wait to learn far more from you. This is really a great web site.

  3. An fascinating discussion is value comment. I feel that you should write more on this topic, it may not be a taboo topic however generally individuals are not sufficient to speak on such topics. To the next. Cheers

  4. Plus Size Halloween Costumes Costumes for halloween are actually costumes used on or around Halloween, a party which usually slips at March 31st. The Costume incorporates a comparatively short historical past. Having on costumes is actually affiliated with other sorts of trips around the time regarding Halloween, sometimes Seasonal.

    Funny Plus Size Costumes

    On the list of 1st referrals that will dressed in costumes at Halloween is at 1895, wherever “guisers” are actually announced within Scotland,[2] but there is not many mention of a dress-up costume within Uk, Eire, as well as Us unless 1900.

    Funny Plus Size Costumes

    Very early costumes highlighted the questionnable as well as old characteristics of the christmas, nonetheless through 1930s costumes based upon personas within marketing like show, books, as well as car radio ended up being widely used. Halloween is formerly sold as a general childrens christmas, design an easy method regarding reining in your licentious as well as harmful beahvior regarding students.

    Very early Costumes for halloween ended up being aimed toward youngsters especially, nonetheless after the mid-20th one, simply because Halloween more and more had become renowned by just grownups, the Costume is used by just grownups about youngsters.

  5. hi my client selling zero rated bakery items(donuts) 0and standard rated foods (ice creams etc) together. how do i calculate the zero rated sales when he don’t issue separate invoices for all the sales.

  6. Pingback: www.stevejbicknell.com blog smashes through 300,000 hits! « Steve J Bicknell

  7. Hi blogger, i must say you have hi quality posts here. Your page
    should go viral. You need initial traffic only.
    How to get it? Search for: Mertiso’s tips go viral

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s