VAT – hot takeaway food
A recent ECJ case examined the VAT liability of hot takeaway food. The case concerned a German sausage seller and the ECJ was asked by the German courts to rule as to whether the sale of hot food and hot drinks freshly prepared for ‘immediate consumption’ was a supply of goods or a supply of catering services. The ECJ ruled that the supply of hot food and drinks from snack stalls, mobile snack bars or in cinema foyers is a supply of goods as long as ‘elements’ of the supply of service are ‘not predominant’. The definition covers food and meals prepared for immediate consumption by boiling, grilling, roasting, baking ‘or other means’. The decision is significant for German taxpayers in that certain supplies of hot food may now be eligible for the German reduced VAT rate.
HMRC have issued a business brief to make it clear that it is their view that the ECJ judgment has no implications for the UK treatment of supplies of hot food and that businesses should continue to treat their supplies of hot takeaway food as before. In the UK there is a specific exclusion from the zero-rate for supplies made in the course of catering which includes the supply of hot food and drink for consumption both on and off premises.
However, a number of large fast food operators are understood to have begun to submit protective VAT repayment claims to HMRC based on the ECJ decision. Businesses who may be affected by this decision are encouraged to consider whether they should submit a protective claim at this stage. It is expected that there will be legal challenges to HMRC’s current position and submitting a protective claim at this stage should ensure maximum VAT recovery if any legal challenge is ultimately successful.