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You may have noticed that servers in sandwich shops ask you if you are going to "eat in, or take away" - and then charge you more for eating in (as well as possibly giving you a tray rather than a bag). The reason is VAT: it may just be a sandwich, but it counts as a restaurant meal if you eat it 'on the premises', and you have to pay VAT on it. Question: is it unacceptable tax avoidance, or even tax evasion, to say you are going to take the sandwich out, and then change your mind - perhaps overcome with hunger - on the way to the door? A recent tax case has highlighted one of the difficulties of getting VAT right if you are selling food. For this rule to apply, you don't have to own the premises - you just have to be selling food that will be eaten where you sell it. A company sold sandwiches in the 'airside lounges' at an airport terminal building. You can't go back through security, and you're likely to be waiting so long that you will eat the food before you board - so it's VATable. The judge commented that the company could collect information about how many people actually take the food onto the plane with them, and then they could zero-rate that percentage. There have been arguments in the past about sales from booths on station platforms (you probably catch a train with the food, not VATable) or from trolleys on the train (VATable). If you are selling what you think is takeaway cold food, and you think you don't have to charge VAT, it's worth checking. We can advise you.  |