VATLive > Blog > European News > UK HMRC wins take away food case

UK HMRC wins catering VAT case

  • Feb 4, 2019 | Richard Asquith

HMRC has won a tax tribunal ruling which held that the sandwich shop chain, EAT Limited, had to charge 20% VAT on its bacon breakfast muffins and grilled ciabatta bread products. EAT is now obliged to settle a £632,620 VAT bill for failing to levy VAT on these products.

Under the harmonised EU VAT rules, the UK VAT Act states that only certain foods enjoy nil-rating for VAT. Catering services involving the heating of food for immediate consumption, such as provided by EAT, are liable to full VAT. EAT lost out because it clearly was preparing the food at hot temperatures for immediate consumption, which is viewed as VAT’able catering services.

Pasty Tax excluded incidental heated take away food

The case followed the principles as George Osborne’s infamous 2012 ‘Pasty Tax’, which sought to levy VAT on hot food such as Cornish pasties.  This budget proposal was eventually watered down to exclude freshly-cooked hot pies and sausage rolls still cooling down on shelves.

Post Brexit, the UK would have more freedoms for setting such reduced VAT rates – although the EU has planned to relax its own rules in this area for member states in the next two years.

Need help with your UK VAT compliance?

Researching UK VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade. 

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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