VAT on Catering and Take Away Food

Posted 06/08/2019

There are many rules regarding food and drinks and how VAT is calculated on these. The applications are often either standard rate or zero rate for VAT purposes. There are many rules regarding food and drink in retailers and grocer’s, but this article will focus on food prepared and supplied by an organization.

There are three main questions to ask when providing hot food to determine what rate of VAT applies.
• Is it within the ordinary meaning of ‘Catering’?
• Is it produced for on-premises consumption?
• Is it intended to be eaten hot as a takeaway food?
If the answer is ‘yes’ to any of these questions, the VAT charge should be the standard rate.Catering is the supply of food and drink to customers from a restaurant, a café, a canteen, a team who supply catering for events and functions, or supply cooked meals to customers at the home of the customer or cooked ready to eat food already on serving plates. In these cases, the VAT is charged at the standard rate. Standard rate also applies on all food types for the supply of catering where a contract is in place, such as supplying food at a certain location for a period as per the customer. The sale of groceries or food that requires additional preparation on the customer’s part is not included in the service.
In the event where food is being delivered but there is no contract, such has a sandwich van delivering food in various areas, then the food will be zero rate or standard rate as per the hot and cold take away food rules.

Premises for a business is recorded as any area occupied by a retailer such as seating within their building or an area accessible to the customers to sit and eat their food with tables and chairs for customers of that business. If the food is sold and seating on premises is available then the charge of VAT is standard rate. General public food areas, such as food courts or benches in a station, are not included as people who are not customers of the business can use these facilities as well.

Cold take away food and drinks are zero rated for VAT, and hot food is standard rate. In these terms, hot is defined as something that is above the ambient air temperature. This does not mean that the entirety of the meal must be hot, only a portion can be hot such as a burger or hot dog where the bread part is cold. All take away food is intended to be consumed by the customer off-premises, and cold food that is sold as take away food is zero rated for VAT. In some cases, while food may be prepared hot, if it is not kept warm by heat lamps or reheated on order and the item is not advertised as being served hot then this will be zero rate.

Tags: VAT, Food and Drinks, Business Set Up, Understanding VAT