VAT Articles

VAT Claims for Food Retailers

One of the 'big issues' in the VAT world at the moment is the possibility of many food retailers recovering significant amounts of overpaid VAT. I included an article in the March Bulletin. Then, in early May, the Mail On Sunday suggested that billions of pounds of VAT were at stake (or steak!). Numerous claims have already been submitted, leading to HMRC putting out a Brief on 1 April 2011.

There are a number of European and UK Court cases which suggest that such claims have a real chance of success. The argument goes something like this: supplies of catering are essentially supplies of services and goods, where the supplies of services predominate. These are always standard rated. However, where the supply of goods predominates, as it does in a fast food context, then that could be zero rated. Where food is essentially pre-prepared rather than cooked to order, it has been held to be a supply of goods. Questions relating to whether the food is hot or cold, or even whether it is eaten on t he premises, become irrelevant.

Comment: the case for excluding supplies from the 'supplies in the course of catering' is a reasonable argument. However, if a taxpayer does not put a claim in, he won't get any money back in the event of a taxpayer victory.