Good news for hot take-away food suppliers?

Good news for hot take-away food suppliers?

Recently there have been two decisions released by the Courts which suggest that the UK is applying the wrong VAT treatment to supplies of hot take-away food.

In the first case the Upper Tier Tax Tribunal ruled in the case of Deliverance Ltd that it was important to take into account the intention of the supplier in supplying hot-food. This seems to be the wrong way to approach the matter as it leaves us with a position where the supplier has to prove that it intended to do something, rather than looking at the basic rules for determining the VAT treatment.

In the decision released last week on several cases referred to it by the German authorities it is clear that the correct view is to consider whether the supply being made is of goods (i.e. food) or services (i.e. catering). In the German cases many of the taxpayers were making supplies from kiosks or stands in public areas. The ECJ decision indicates that where there is little or no additional supply, other than hot-food, the supply is one of goods. In the instances referred to the ECJ by Germany the supplies were, as goods, eligible for a reduced rate of VAT.

How might this apply in the UK?

That is a very good question to ask!

It is clear that the simple approach of looking at whether the supply is of goods or services might provide one way of applying the ruling of the ECJ. The difficulty arises from how HMRC might approach the issue. I’ll avoid commenting on that further here as I’m sure HMRC need no help from me in considering its position – although if they ask I’ll happily answer!

The upshot of all this is that there might be a change to the current rules that would make supplies of hot take-away food zero-rated. If that happens it will be good news for Fish and Chip shops, and other take-away outlets, as it is likely to see them able to reduce their prices.

What’s your view? Leave a comment below.

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