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HMRC internal manual

VAT Food

Excepted items: catering: secondary catering issues: supplies to persons making supplies of catering

A supply in the course of catering is, for VAT purposes, to be taken as a supply to the final consumer or to a person receiving it on behalf of the final consumer.

Where a trader supplies prepared cold food and drink to a customer who then sells it in the course of catering, the first supply is not regarded as being made in the course of catering. Examples are bulk supplies of sandwiches, salads and prepared meals requiring cooking or re-heating.

However, you should remember that:

  • some items such as ice cream, confectionery and soft drinks are always standard-rated;
  • if the food is prepared on the premises where it is to be eaten, then the supply is regarded as being in the course of catering and standard-rated (Note (3)(a) Group 1 applies); and
  • if the food is supplied hot to be eaten while still hot, then the supply is in the course of catering and standard-rated (Note (3)(b) Group 1 applies). The P&S Catering tribunal on this point is outlined below.

In the case of P & S Catering (LON/90/1222Z), the trader ran a restaurant, and also on a daily basis provided cooked lunches for a nearby school.

The meals were prepared in the restaurant and taken whilst still hot to the school to arrive at about 11.30. At the school they were not re-heated, but were placed on electrically heated trolleys. They were served from these trolleys to the children at 12.00 and 12.45.

The trader claimed that his purpose was to supply fresh food which could be re-heated - the fact that it was hot when taken from his premises was incidental. Customs and Excise argued that the trader was supplying hot take-away food liable to VAT at the standard-rate.

The Tribunal found for Customs and Excise on the grounds that the trader ensured that the meals were as hot as possible when they left his restaurant, and that it was his purpose to supply meals to the school so that they could be consumed hot. Note (3)(b) to Group 1 therefore applied, and the supplies were standard-rated.