Q:
I have read the definitions of the premises that would require VAT to be collected on hot food sold for immediate consumption e.g. burgers, hotdogs and noodles etc. Looking at this list, it wouldn’t seem to include mobile premises but seems to be aimed at “fixed” premises. Are my assumptions correct or should i be paying VAT? Of course, if i had to pay VAT it would most likely finish my business, i’m not anywhere near in the same position as McD’s etc. HELP!!!!!
A:
Hi there
I’m a bit confused about your question as the sale of ANY hot take-away food or drink is liable to VAT regardless of where it is sold. The on/off premises issue applies to the liability of most cold take-away food or drink which is normally zero-rated, unless it is sold “on the premises”, in which case it is standard rated.
Hot Take-away food
First of all, to confirm the position about hot take-away food – see the information about this in VAT Notice 709/1: Catering and Take-away Food, Section 4 here: http://tinyurl.com/37p8wuh which confirms that hot takeaway food and drink is standard rated, regardless of where it is sold or consumed. So if you sell burgers, hot dogs, chips, hot drinks etc then you have to pay VAT on the sale of those items, wherever your van is located.
I know that this is particularly difficult as it basically means that you have to pay 7/47 of most of your sales income as output tax and you won’t have much in the way of input tax to offset against this. If you weren’t aware of this, I imagine it could come as a bit of a shock if you haven’t factored it into your sales prices.
You might be able to reduce your VAT bill by using the VAT Flat Rate Scheme or one of the retail schemes if you sell a mixture of hot and cold (and off-premises!) food items. I’m sure your accountant can advise you about these topics but let me know if you need further information and I’ll point you in the right direction
Premises
Back to your original question which was about the definition of “premises”. As I explained above, the sale of any food or drink on the premises on which it is sold is liable to VAT, so this applies to cold takeaway food and drink as well as the hot stuff. The definition of “premises” is explained at section 3 of VAT Notice 709/1 which you’ve probably already seen and as you say it refers mostly to “fixed” premises, not mobile premises.
There is some, however, useful guidance on the subject in the HMRC internal/staff manual which includes a very useful list here http://www.hmrc.gov.uk/manuals/vfoodmanual/vfood4580.htm which shows the types of venue where catering might be supplied and what is defined as “premises” for VAT purposes. You will see that under “Mobile Outlets in public” the definition includes:Only the outlet and facilities like the counter and any tables and chairs are treated as the premises.
So you have to apply this principle to your own trade and decide whether or not you sell in any circumstances where you provide any sort of premises – for example if you were selling in a car park at a football match or show of some kind, then you would probably treat as “premises” the van itself plus any adjacent area where you have tables, chairs or other facilities provided for customers to consume food.
Obviuosly I don’t know your circumstances but I hope that the information provided here will help you to work out your own VAT liability. I would suggest discussing the subject with your accountant in case you’re in any doubt.
Marie