Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

VAT Taxable Person Manual

From
HM Revenue & Customs
Updated
, see all updates

Particular trades: Catering: Catering contractors operating as principal in non-commercial establishments

In this situation the client normally wishes to have minimal involvement in the provision of catering and therefore engages a catering contractor to take over the running of the catering facility. The tone of the agreement between the client and contractor will be very much one of the client allowing the contractor the freedom to do things in their own way, whilst stressing the responsibilities which this entails. Typically, the caterer will purchase ingredients, prepare and serve the food , retain and account for VAT on the takings, take out public liability insurance (for example against food poisoning), and set the prices.

In some instances the contractor may have the freedom to set prices restricted because the canteen is subsidised, with the client undertaking to indemnify the caterer with a guaranteed minimum level of income. In such circumstances the caterer should account for the appropriate output tax on all receipts from the sale of food and beverages and on the amounts received from the client. In other cases the caterer may even make a payment to the client for the right to provide the catering at that particular site. The client should account for VAT on any such receipts.

This is the only situation in which the final supply of prepared food is made by the catering contractor, and not the client.