HMRC reminds restaurants and takeaways of VAT obligations on hot food

HM Revenue & Customs (HMRC) has recently issued letters to restaurant and takeaway businesses across the country, emphasising the importance of correctly applying VAT on hot food.

This move comes amidst potential confusion amongst business owners regarding the varying VAT rates applicable to different types of food items.

Understanding VAT on hot and cold takeaway food

The crux of the matter lies in distinguishing between hot and cold takeaway food items and their corresponding VAT rates.

It’s essential to note that all hot takeaway food and most drinks are subject to a standard VAT rate of 20 per cent.

This includes a wide range of items typically sold in a heated state or specifically prepared to be consumed hot.

On the other hand, certain cold takeaway foods can enjoy a zero-rated VAT status.

Notably, this includes items like sandwiches, cakes, and even pasties and other cooked pastry products.

However, for these items to be zero-rated, they must not be advertised as hot products and should not be kept warm post-cooking.

Seeking professional advice

Given the nuances and complexities in VAT treatment for different food items, HMRC advises business owners to consult with their accountants or financial advisors if they are uncertain about the correct VAT rates to apply.

This is an opportune moment to proactively engage with your accountant as a business in the restaurant and takeaway sector, ensuring you are up to speed with all your VAT and tax obligations.

Navigating the VAT landscape can be challenging, especially with the intricacies involved in the food and beverage sector.

That’s why it is always important to discuss your VAT and tax liabilities with a qualified financial expert.

Your accountant can not only help streamline your tax liabilities but also develop business strategies to reduce your expenses and maximise your profits.

To talk to an experienced accountant, please contact one of our team.