Did you ever consider when buying lunch why you were asked if you eating in or taking the food away? Sometimes its because you are charged extra for eating in compared to when you take food away, however, mostly it’s to make sure that VAT is being charged correctly.
If you operate a business that caters to café or sandwich styled food businesses you need to make sure that you are charging VAT correctly, hot drinks and crisps are always standard-rated. Cold sandwiches are treated differently depending on if these are consumed at the premises or taken away, cold sandwiches which are consumed off premises are zero-rated for VAT purpose.
What can go wrong?
Staff at such locations are sometimes forgetting to ask the question about where the food will be consumed, which results in zero-rated VAT charge for food instead of the correct standard rate if the food is being consumed on premise. This is good news for the client however the liability of this remains with the owner of the business. It is therefore recommended to put in effective solutions in place, having a meticulous Accountant who reviews your books and VAT returns could end up saving you from penalties and HMRC investigations.
With MTD lurking around the corner it is advisable to make sure that processes and systems are in place to avoid any complications going forward.
Clear House Accountants are specialist Accountants in London, our in-house VAT consultants help businesses stay ahead of complicated VAT rules and regulation while performing compliance work to the utmost efficiency.