Excepted items: catering: premises: premises tribunals that pre-date the 1 October 2012 changes.
The Compass case (Compass Contract Services UK Ltd (V.19053&(2006)EWCA Civ 730) concerned a contract caterer that supplied food within the BBC Television Centre in Shepherds Bush in London. This large site contained many buildings and was spread across a considerable area and, because of the importance of the area, was a restricted access site. HMRC policy at that time interpreted the whole of the restricted access area to be the premises for the purpose of Note 3.
Compass were contracted, through a property partnership, to provide around 14 catering units within that site, ranging from restaurants and canteens to retail outlets and tea bars. At issue was the liability of items of cold food (not otherwise taxable under Group 1), such as sandwiches, salads and biscuits, which were sold from the retail units and tea bars. Compass maintained that the premises should only be the retail outlets themselves, and not the wider BBC site: meaning that such items of cold food taken-away from the retail units were zero-rated. HMRC considered that the premises should be the whole of the BBC Television Centre, and that the take-away cold food was therefore standard-rated.
The tribunal decided in favour of Compass on the basis that it was only the units controlled by Compass that were the relevant premises. The tribunal decision contains useful discussions about the definition of premises and the right to occupy the units involved. The decision of the tribunal was later upheld by the Court of Appeal.
Accordingly, HMRC have adopted a policy on premises that defines the premises as the area occupied by, or controlled by, the retailer and/or those areas which have been specifically provided for the customers to consume the food purchased.
The introduction of Note (3A) effective from 1 October 2012 has further extended the meaning of ‘premises’
Retailers serving from a hatch/window/bar-type facility
In Ivy Cafe Ltd (MAN/76/0073), the trader had a concession to provide the catering at a working men’s club. The trader had use of the club kitchen and provided food to club members through a hatch to the main hall and through a window to the club car park. The trader argued that his premises were only the kitchen.
Had note (3A), (introduced with effect from 1 October 2012), been in place before this case was heard it would have assisted the officer to decide whether the car park was ‘premises’ for the catering outlet.
Carpenter & Hayles
In the case of Carpenter & Hayles (trading as Carpenter Catering) (V.18148), a partnership sold sandwiches from a counter in the common room of a hospital postgraduate centre. Customs and Excise issued a ruling that the supply of the sandwiches (and other cold take-away items) was made in the course of catering and was therefore standard-rated.
The first tribunal was solely concerned the question of whether it was a supply of catering per se. The second tribunal held that, for the purpose of Note (3)(a) of Group 1, the premises were only the common room and not an adjacent roof terrace. Accordingly VAT was only chargeable on food which was supplied for consumption in the common room. Any food consumed outside of the common room was not supplied for consumption on the premises.
This case also touched upon the existing policy that the chairs and tables adjacent to a catering outlet are included as premises for the purpose of Note (3)(a). The tribunal considered that access to an adjacent roof terrace was open and unrestricted, and that therefore it should not be held to be part of the premises associated with the counter, unlike the common room that the trader served via the counter in that room.
Note (3A), effective from 1 October 2012, would have had no effect on this case, because the roof area was not an area set aside specifically for the consumption of the suppliers food.
In the case of Mrs D A Sims (LON/86/0152), the appellant ran a small snack bar situated in an office block occupied by a number of companies. The main occupier had granted a licence to occupy, and there was no restriction as to whom she could supply. There were no facilities for consuming the food in the immediate area; and her supplies, mainly sandwiches and rolls, were taken back to the various offices to be eaten. She also made supplies to drivers coming in from a nearby lay-by and workers from an adjacent building site.
The tribunal ruled that the office block formed a single set of premises and that supplies to persons working in the various offices were standard-rated. This amounted to 70% of her trade.
However, the High Court reversed this decision, ruling that the premises were the 12 ft by 12 ft room from which she supplied the food. As the food was not consumed in that room or nearby, Note (3)(a) could not apply. Her supplies, apart from soft drinks and hot food, were therefore zero-rated as cold food.
- The Sims decision was previously often quoted in contrast to the decision of the tribunal in the Bergonzi case (reference below). The two cases were effectively distinguished on the grounds that in the Sims case public access was allowed to the premises, whereas
- Bergonzi concerned restricted access premises.
Since Compass this distinction is no longer made. Where an office block contains a canteen or similar catering facility, the premises for the purposes of Note 3 are considered to be the retail unit itself, plus any dedicated areas of seating/tables located at the retail unit for the use of customers, even if the area is not owned or controlled by the actual retailer.
Note (3A), effective from 1 October 2012, would have had no effect on this case, because there was no area set aside for the consumption of the suppliers food.
In Crownlion (Seafood) Ltd (MAN/84/1223), the appellant occupied a kiosk within a courtyard which formed part of a larger shopping precinct. The courtyard contained ten kiosks, each selling its own specialised range of fast food such as pizzas, pasta dishes and baked potatoes. The precinct’s owners provided a common seating area bounded by the kiosks, and provided staff to maintain the common area. The kiosk’s occupant provided his own staff for cooking and selling the food and his own disposable containers. There was free public access to the area whether food was purchased or not.
The tribunal ruled that the kiosk and the courtyard together comprised premises within the ordinary meaning of the word. Supplies from the kiosk for consumption at the tables provided were covered by Note (3)(a) and therefore standard-rated.
This is a position still upheld by HMRC. It is a common situation in such shopping centres that a group of kiosks will share a common dining area (a food court) filled with tables and chairs that are often provided by the Shopping Centre. It is also common for such an area to be paid for by the kiosk owners through a service charge which provides for the availability and cleaning of such a dining area.
With effect from 1 October 2012 Note (3B) clarifies that the common seating area provided by the precinct owners is now legally considered to be ‘premises’.
However, this needs to be distinguished from the tribunal decision in the case of Armstrong (BEL/83/0002). Here the trader operated a small food kiosk within a shopping centre. Nearby, but also within the centre, were some tables and chairs, over which she had no control. The tables and chairs were provided by the shopping centre and were used both by her customers and by shoppers passing through the mall. The tribunal ruled in favour of the appellant in that the mall was more akin to a public thoroughfare than a set of premises.
Policy therefore includes seating areas as premises within the context of Crownlion, above, but does not include areas that are genuinely public thoroughfares, with no seating dedicated to the consumption of food purchased.
The Compass case, above, briefly mentioned the seats and tables located near one of the tea bars in that case. However, this was not a matter discussed in any detail at that court hearing; and in that case the area concerned was a ‘break out’ meeting area complete with comfortable chairs and laptop sockets. HMRC would not now argue that this area was included in the premises, as it was clearly intended for the use of meetings for BBC employees and guests, and not intended for the use of customers that had purchased food from the tea bar.
If Note (3A) had been in place at the time it is unlikely it would have affected the outcome. The Tribunal accepted that the seating area was a public thoroughfare.
Made to Order
The Made to Order Tribunal  UKVAT V209559 considered the liability of cold sandwiches sold from retail outlets in various shopping malls. The outlets were self contained units sited with other eating outlets with areas of communal tables and chairs for the customers to consume their purchases. The Tribunal considered whether the ‘premises’ was just the retail outlet itself or whether it included the areas of communal tables and chairs.
Although Made to Order contributed to the upkeep of the eating area by the payment of a service charge the Tribunal did not consider the implications of this in any detail. The Tribunal found for Made to Order and ruled that only the kiosks were the ‘premises’.
HMRC consider that this decision was based on the specific facts of the case and does not set a precedent.
With effect from 1 October 2012 Note (3B) clarifies that a seating area of this type is now legally considered to be ‘premises’.
HMRC’s previous policy also quoted the following cases, which are recommended reading should questions arise about the policy on premises prior to the Compass case:
- Fresh Sea Foods (Barry) Ltd (LON/90/0485X)
- GME Bergonzi (trading as Beppe’s Buffet Service) (LON/93/1756A)
- Ashby Catering Ltd (MAN/89/0144) & (MAN/89/0426)
- Bishop & Elcocks (LON/01/0690).