Caterers will need VAT clarification

07 September 2006
Caterers will need VAT clarification

New rules for VAT on food sold by caterers will cause major confusion among contractors, legal experts have warned.

Alan Connell, VAT director at law firm Eversheds, said the redefinition of "premises" following a landmark legal victory by Compass has created a grey area in the law.

Under previous rules, sandwiches sold by caterers were not considered as "take-away" and therefore exempt from VAT because their "premises" were taken to mean the entire client site. Sandwiches, in addition to cakes and fruit, were considered as eaten on site and therefore subject to the tax.

Compass won a change in the law in June after convincing the High Court that its retail points at the BBC were premises in their own right. But Connell said the problem now arises when deciding what is "on" and "off" site. "The law is not explicit. Does a seating area a few metres from the retail space mean that you are off site?" he asked.

According to Vaughan Chown, VAT director at consultancy Vantis, selling sandwiches to clients in locations like Earls Court and Wembley would be problematic because of a lack of guidance from HM Revenue & Customs (HMRC). "It's unclear, but I would argue that if you bought a sandwich from a retailer at Earls Court and ate it as you walked round an exhibition, then you are off the premises," he said.

Caterers are delaying making changes before HMRC provides further clarification.

Andrew Martin, group finance director at Compass Group, said: "Until that detailed guidance is issued and we can develop our own policy and guidelines, we must treat VAT consistently across all our locations, in line with current regulations."

An HMRC spokesman said: "We'll be issuing further guidance shortly when we update VAT notice 709/1."

VAT liability

Zero-rated food

  • Sandwiches, biscuits, cakes (including chocolate cake), fruit, toasted panini and baguettes, hot and cold sausage rolls, milk drinks.

Standard-rated food (17.5%)

  • Crisps, nuts, sweets, chocolate, chocolate biscuits, alcohol, ice-cream.

By Tom Bill

E-mail your comments to Tom Bill]( will need VAT clarification) here.

Get your copy of Caterer and Hotelkeeper every week -

[Sudoku]( "A new puzzle every day!") Join the craze and play Sudoku online!
[Newswire For the latest hospitality news, sign up for our e-mail news alerts.
The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Check mark icon
Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.


Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.

trade tracker pixel tracking