HMRC pour cold water on hot take-away food?
HMRC pour cold water on hot take-away food?
I wrote about this in my article Good news for hot take-away food suppliers? a few days ago after the release of the European Court of Justice’s (ECJ) decision in Manfred Bog and others. HMRC has now published a Revenue & Customs Brief which almost makes clear HMRC’s position in relation to the impact of the decision. The case was referred to the ECJ by the German tax authorities. In Germany there is a reduced rate of VAT for foodstuffs.
The question considered by the ECJ was whether the supply by the vendors from places such as mobile snack bars was a supply of goods or a supply of services. In press articles HMRC was quoted as saying they treated all supplies of food as a supply of goods. There is no mention of that in the Revenue & Customs Brief. The brief is a lot of waffle with very little substance, although it does make clear that HMRC will entertain no claims for zero-rating.
The question has to be whether UK legislation is in line with the EU legislation. Is the supply of catering services, e.g. a restaurant, a supply of foodstuffs and thus a supply of goods? Or is it a supply of services?
One thing is clear, to get HMRC to change its stance on this will require someone to take the matter to Court. I think HMRC might be wrong about the application of the zero-rate to hot take-away food being impossible – would it be an extension of the zero-rate? Or just a redefining of hot take-away food so that it falls within the zero-rating?
Have a view on this? Leave a comment: let’s start a discussion.
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how can tescos and the like cook, and keep in a hot display chickens, sausages, ribs, southern fried chicken etc etc and be allowed to sell them as zero rated goods when the takeaway down the road cooks and keeps in a hot display in exactly the same fashion, exactly the same products but has to pay the full 20% vat
clearly their is something far wrong here
if we sell a cold sandwich for consumption off the premises their is no vat on it, if howver it is consumed on the premises their is vat on it becasue of the service element, why then should a hot filled roll be subject to 20% vat for takeaway, their is no difference in the service only the temperature that the food is served at.
Colin
Your question is one that many will be asking. There are good reasons why Tescos and others are allowed to zero-rate the hot food they sell – I understand the concern you express about how ludicrous this is. We’ll have to wait for someone to take up the issue and take HMRC to Court to get resolution I think.
Robert
Time moves on and it’s time now for the ‘Hot’ penalty for take away food to be removed therefore ‘Hot’ sales taken off the premises wil be treated the same as cold, therefore zero rated.
The big fast food chains only have to have an eat in or eat out option on the tills to conform.
I hope one of the bigger fish takes the matter to court as I am sure common sense will prevail, giving a fair outcome which will remove the ‘Hot’ penalty
.
Alex
Alex
I hope you are right and the penalty on hot take-away food will be removed. It’s likely to be a slow process as I expect HMRC will fight it tooth and nail.
Robert
Robert, the supermarket hot food Deli selling cooked chicken at zero rated VAT against the chap selling the same product in his take away next door at standard rating of 20% VAT proves the rating should be set at zero for hot and cold food to be consumed off the premises. Why should a supermarket sell a portion of hot chicken in a foil bag ( To keep it hot) at say £3.33 and the chap next door in his take away sell exactly the same product in a foil bag for the sum of £4.00 including VAT at 20%? Its not fair and reasonable.
Alex
Alex
I’m in full agreement with your comments. The example you give highlights how stupid the law is in this regard. Essentially the same supply is 20% more expensive if bought from the take-away.
Seems to me that it would be unwise to open a hot food take-away stand near a supermarket that sells hot food in the current climate. And all the more reason to hope someone will challenge HMRC’s stance on this issue.
Robert
have spoken to KPMG who were involved in the german decision and they have confirmed that they have a household name national chain about to launch a challenge to this.
as a takeaway owner myself i await with baited breath!!
Colin, good news! We have taken advice on making a Protective Claim and are watching events unfold.
We also have been offered a no win no fee deal from another VAT consultancy, so we remain hopefull.
Alex
I think at this time submitting a protective claim will achieve nothing because there is nothing in the system behind which your case can be stood over. This means that when HMRC reject your claim you could become the lead case as you will either have to appeal or back down.
Robert