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HMRC internal manual

VAT Food

From
HM Revenue & Customs
Updated
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Hot and cold take-away food: temperature

Prior to 1 October 2012 the Act required the temperature of the food to be ‘above the ambient air temperature’ at the time it was provided to the customer. In a shop this would simply mean above the room temperature. For supplies made in the open air such as from a van or kiosk this would mean above the surrounding air temperature.

This criterion was open to misinterpretation. For instance, in freezing conditions it could, if interpreted strictly, cover supplies just above zero degrees. In practice, however, the precise temperature of the food is not particularly important - food and drink that we consider to fall within the category of hot take-away will have been heated to a higher temperature than the surrounding air temperature.

The note governing this criteria in the law, Note 3(b) (ii) was changed in 2004 to avoid doubt over the time of supply reference previously used in the law.

The VAT law was further amended with effect from 1 October 2012 with the introduction of new Notes (3B), (3C) and (3D). These amendments ensure that businesses selling food after 1 October 2012 that is hot at the time it is provided to the customer will need to work through each of the 5 tests outlined in VFOOD4220 to confirm that none apply before they can zero-rate their products.

This is illustrated in the following examples.

Example 1.

A retailer sells a Cornish pasty that has been baked off and then left to cool naturally but is still hot at the time it is provided to a customer (and so the precondition is satisfied). However, the retailer does not intend that the pasty will be consumed hot by the customer (Test 1 is not met); it has not been cooked to order (Test 2 is not met); it has not been kept hot after being cooked (Test 3 is not met); it has been provided to the customer in a standard paper bag (Test 4 is not met) and it is advertised as ‘freshly baked’ (Test 5 is not met). As none of the tests are satisfied, the sale of the pasties are zero-rated.

Example 2.

The retailer in example 1 above decides to keep its pasties under heat lamps to slow the cooling process. In this example, Test 3 is met as the pasties are being kept hot after they have been cooked and the sale of the pasties is standard-rated.

Example 3.

The retailer in example 1 above decides to advertise its pasties as ‘hot’ rather than ‘freshly baked’. In this example, Test 5 is met and so the sale of the pasties is standard-rated.

Example 4.

A retailer bakes batches of fruit pies, tarts, cakes, buns and bread for sale throughout the day. None of these products is baked with the intention of being eaten hot, baked to order, kept hot after being baked (they have been allowed to cool naturally), provided in heat retentive packaging or advertised as ‘hot’. The sale of all these products is zero-rated as, even where they are hot at the time they are provided to the customer, none of the 5 additional tests are satisfied.

Example 5.

A retailer sells hot freshly cooked chickens that have not been heated for the purposes of enabling them to be consumed hot, have not been cooked to order, have not been kept hot after cooking (they have been allowed to cool naturally), are provided to the customers in specially designed (foil lined) bags designed to prevent leakage of fluids and grease from the chicken, and are not advertised as ‘hot’. The sale of these hot chickens is standard-rated as Test 4 is met as the chicken is provided to customers in packaging that is specially designed for hot chickens.

Example 6.

A retailer sells joints of beef that are kept hot in a cabinet after roasting. The sale of these joints is therefore standard-rated as Test 3 is met. At the end of the day, the retailer removes the joints that have not been sold from the heated cabinet. These are sold cold the next day or are used to make cold takeaway sandwiches. As they are not hot at the time that they are provided to the customer the ‘precondition’ is not met and so their sale is zero-rated for VAT purposes.