Coronavirus: VAT on cafe and restaurant takeaways

30th May 2020

As part of the gradual easing of the lockdown rules over the next few weeks it is likely that many cafes and restaurants will start opening to serve takeaway only.

This may change the VAT treatment as some cold takeaway food and drink can be zero-rated for VAT.

What is takeaway?

If no seating area is provided for customers to eat or drink their purchases then the supply is takeaway and the takeaway VAT rules apply. However, if you do provide some seating you will need to account for VAT on all the purchases by customers who will use the seating.

What takeaway can be zero-rated for VAT?

All hot/cooked takeaway food is standard-rated for VAT with the exception of food that is still cooling following cooking. If you sell pasties or other pastries, you can zero-rate them while they are still warm as long as you don’t keep them warm or describe them as “hot food”.

Some food and drink items are always standard-rated even when sold to take away – this includes sweets and chocolate, crisps, ice creams and most drinks.

Items such as sandwiches and cake are zero-rated when sold to takeaway.

How do I account for VAT?

In order to benefit from the zero-rating for cold takeaway food, you will need to be able to identify these sales.

This can be done by using till buttons or EPOS codes for the items which qualify.

In the longer term it may be appropriate to arrive at a percentage of total sales which could qualify for zero-rating, but detailed records would need to be kept for some time to form a basis for such an estimate.

Please contact us for more advice if these issues are likely to affect you.

For more guidance on getting back to work, check out our Business after COVID-19: Transition Knowledge Hub.

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