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Do I have to charge VAT on food that is delivered cold to my customers?

My Mate Says… ‘I don’t have to charge VAT on food that is delivered cold to my customers’.

Under VAT notice 709/1, cold takeaway food and drink is zero-rated for VAT, if it’s not of a type of food that is always standard rated such as crisps, sweets and beverages.

If food comes out of the oven and it is above the ambient room temperature, it must not pass any of the 5 tests below to secure the zero-rated VAT treatment:

 

  1. Been heated for the purposes of enabling it to be consumed hot

Products that have been cooked specifically to enable consumption whilst still hot (as a result of being freshly prepared, baked, cooked, reheated or kept warm) would pass this test so would be standard rated (20%) for VAT. Unless the food is not intended to be eaten hot but as a result of it being freshly baked for example, it hasn’t yet cooled down.

Examples include; Pizzas, Kebabs, Chinese/Indian takeaways and hot soup.

If a takeaway pizza is being delivered cold as the driver got stuck in traffic, this wouldn’t make it a zero-rated supply as the food was meant to be consumed hot, but circumstances meant that it wasn’t.

  1. Been heated to order

Sale of food that has been heated to the customer’s order is standard rated. For example, if you toasted a panini for a customer, this would make it a standard rated supply.

 

  1. Been kept hot after being heated

Food that is kept hot after being cooked, heated or reheated is a standard rated supply. For example, if a chip shop fried some battered cod and kept it warm in the heated cabinet, this would be a standard rated supply.

 

  1. Provided to a customer in packaging that retain heat (even if the packaging was not designed for that purpose)

If the food being provided to a customer is in packaging that retains heat this would make it a standard rated supply. The packaging doesn’t have to be primarily designed for that purposes but serves this purpose would be caught by this rule. For example, if an Indian takeaway delivered Naan breads in a foil lined bag, this would be standard rated due to the packaging used.

 

  1. Advertised or marketed in a way that indicates that it is supplied hot

If you market/advertise your takeaway food as being supplied hot, this will make it standard rated VAT. For example, if a pizza delivery company advertising that the pizza will arrive piping hot ready for you to enjoy, this will make it standard rated.

HMRC have also specified that if the pictures of the products show steam rising from them, they would deem this as advertising them as being supplied hot.

 

VAT is a complex area which is regularly argued within the courts of the interpretation and classification of a service. If you are unsure about the VAT treatment of your services, please do not hesitate to contact us on 01908 219 100 or by email at enquiries@advaloremgroup.uk

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