Eat Out to Help Out: HMRC Q&A
Angela MacDonald, recently appointed deputy chief executive and second permanent secretary at HM Revenue and Customs (HMRC), has provided answers to commonly asked questions around Eat Out to Help Out.
Can you give us a simple summary of how Eat Out to Help Out works?
The Eat Out to Help Out scheme invites establishments serving food to eat on-site to participate in substantial government subsidised food discounts. Their customers will be able to enjoy their meals at 50% off (up to a maximum of £10 per person dining) and the restaurant, bar or café will be able to claim that discount back from the government. We are aiming to boost traditionally quiet days, so we're offering the discount on Monday, Tuesday and Wednesday, and this will run for the full month of August on all food and non-alcoholic drinks.
Why this scheme in particular?
The government is fully aware that the hospitality industry has been one of the hardest hit by the Covid-19 crisis and that, as the lockdown restrictions ease, we need to encourage the public to return to their favourite eateries. We know how hard restaurants, cafés and pubs have worked to transform their premises and introduce safety measures, and we felt that, if people could just see and experience these for themselves, there'd be much more confidence around eating out and people would be more likely to keep doing it.
The hope is also that by inviting people to visit venues on their traditionally quiet days, we're making it worthwhile for establishments to open again and for staff to get back to work.
Nothing like this has ever been tried before in the UK, so it's a new challenge for everyone involved. But we're very pleased about the spirit in which it has been received and we've had fantastic support and engagement from those who are eligible so far.
What happens if a customer says they are eating in and then leaves with their meal for some reason?
We've had a few queries on this and we've decided that, so long as the participating establishment has a reasonable expectation at the point of sale that the customer is eating in, then the discount will still apply.
I must stress that Eat Out to Help Out purely applies to food and drink consumed on the premises, based on the philosophy and purpose behind introducing the scheme. We are working to support a sector which really needs the additional help right now, and we believe people will understand this and get behind that goal.
However, we recognise that circumstances can arise which will mean people may need to leave before their meal is finished and that they may wish to take what's left with them. We have accounted for this in the guidance and the establishment shouldn't be penalised for such an occurrence – the discount will still stand.
How do businesses record covers? Will the amount repaid be assessed on how many main courses are ordered, for example, or do restaurants need to keep a specific tally?
To make your claim under the scheme, you will need to keep and provide records for each day you've used the scheme. The key information required is:
• total number of diners (covers) who have used the scheme, including children;
• total amount of discount you've given;
• period you're claiming for.
That's all you need if you only have one establishment, but if you're making a claim for more than one establishment, you must provide some additional information, specifically:
records for each establishment;
overall total value of the claim for all establishments.
How will we calculate VAT – does it apply to the total or to the amount after the discount?
You'll still need to pay VAT based on the full amount of your customer's bill before the scheme discount is applied. In turn, this amount will need to be reflected in the correct VAT return for the period in which the transaction took place.
We appreciate some establishments won't have a point of sale system that can accurately account for VAT under this scheme. Anyone that doesn't is able to make a manual adjustment to their VAT account after the sale.
If you can't include the adjustment in the period the transaction took place, we ask that claimants estimate the VAT. You must account for any difference in your next VAT return.
You must include the payments you receive as income when you calculate your taxable profits for income tax and corporation tax purposes.
What information is needed to process requests for payment? How quickly is payment made?
You'll need the records we described earlier, but there's no required way to keep them – you can use any method that suits your business.
To show the link between the number of diners who got the discount and the total value of scheme discount being claimed for in each claim period, for each day you must have a record of the:
• total number of diners who have used the scheme discount in your establishment;
• total value of all eat in food and non-alcoholic drink sold where the scheme discounts were given;
• total value of scheme discounts you've given and are claiming for.
If using the scheme for more than one establishment, remember that you must keep these records for each. After entering your claim, you'll receive your claim reference number. HMRC will check the claim is correct and pay the amount of the claim by BACs directly into the bank account you gave when you registered, within five working days.
Can customers use Eat Out to Help Out in conjunction with existing offers?
Yes, they can. We've decided to make the Eat Out to Help Out approach compatible with existing offers and discounts businesses are offering.
To calculate the value of the transaction and make a claim to HMRC where another discount is in play, you must apply the relevant special offers, vouchers or discount schemes you are promoting or accepting first.
You must also deduct any service charges before applying the Eat Out to Help Out discount as these are not included– the reduction only applies to spend on food and non-alcoholic drinks.
What would your message be to any businesses who haven't signed up yet?
I think I'd encourage all businesses to take a moment to look into the scheme and consider if it's right for them. We feel it is benefiting those who've registered; we've seen establishments report an increase in bookings on the days that the offer applies. Some have decided to extend their opening hours and even added opening days to ensure that they can accommodate demand.
If you do have the space for more diners on Mondays, Tuesdays and Wednesdays, whether it's for breakfast, lunch or dinner, or anything in-between, I think it's worth signing up and trying to ensure your premises are as busy as any others in your neighbourhood. And it costs you nothing, just a little of your time.
If you've not yet registered your business, you can do so online here.
HMRC has published more information on how the scheme will operate available online. You can find our guidance for participants here.