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VAT status of ‘hot food consumed off the premises’ - country houses and rural businesses may have grounds for a claim


Country houses, estates, parks and gardens and other rural visitor attractions will be gearing up for the coming May bank holiday and warmer days, and many will already be open. In terms of their catering however, more than the usual uncertainty and confusion may hang over whether hot food consumed off the premises is zero rated for VAT or not.  Saffery Champness is advising its clients to consider ‘defending their positions’ by submitting claims to HMRC in the light of a recent case in Germany.
Also, following changes to UK VAT legislation that took effect from 1 October 2012, there may be scope for those providing hot food consumed off the premises to have better grounds for a claim.
Douglas Gordon, Saffery Champness Partner, and VAT specialist on the firm’s Landed Estates and Rural Business Group, says:
“HMRC have stated that they do not accept the German case, and how that impacts on the validity of UK legislation, so any claims made by UK businesses will most likely be refused, and a test case will be the logical outcome.
“We also now have a better picture of what constitutes the definition of ‘premises’ as, following the Compass case, HMRC no longer take the view that on sites where there is restricted access, ‘premises’ comprises the whole of the site.
“Also, guidance does not distinguish between situations where a retailer is a tenant on the site or the owner of the site itself. So one should assume for a stately home for example, that the owner of the property, if he or she owns and runs a catering outlet as a part of that business, will operate under the same rules as a tenant, with the term ‘premises’ applying to actual restaurants, cafes or other retail outlets, and other areas where chairs and tables are for the specific and exclusive use of customers of these outlets, and not across the entire site.”
It is really only businesses that have significant hot food sales that might fall into this grey area that should consider making a claim.  Businesses will need to be able to identify the extent of takings from takeaway hot food, and be able to extrapolate the split between eat-in and take-away customers.
Douglas Gordon says:
“It would be simplest for a claim to cover all supplies of hot food that is taken away since, if HMRC were put in a position where they had to pay a claim on hot food, they would resist payment of claims on specified freshly baked products such as pies and pasties not served to customers in a way that fits their definition of hot food before or after 1 October 2012 – the now famous hot pie tax.”
Saffery Champness is urging that where there is doubt over catering operations in relation to tax, discussion with a professional adviser is an essential start-point for any business.
Further information from:
Douglas Gordon
Saffery Champness 
Tel: 0207 841 4000 
E: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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