Wedding cakes and cupcakes VAT treatment?

Wedding cakes and cupcakes VAT treatment?

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If a baker decides to make wedding cakes and cup cakes will they be vat standard rated?  Everything is prepared at the bakery and delivered to the customer.  Customers include Joe Bloggs getting married as well as a lot of corporate customers, exhibitions, trade shows etc

Ive had a look through the VAT website and it states that "Cakes including sponges, fruit cakes, meringues, commemorative cakes such as a wedding, anniversary or birthday cakes" are zero rated, however "Cakes supplied in the course of catering – see Notice 709/1 Catering and take-away food"
 

So, onto Notice 709/1 and what exactly catering is defined as?

2.1 What is the ordinary meaning of catering?

Catering in its ordinary meaning includes the supply of prepared food and drink. It is characterised by a supply involving a significant element of service. Obvious examples of supplies in the course of catering include:

  • Supplies made in restaurants, cafes, canteens and similar establishments (except supplies of cold take-away food).
  • Third party supplies of catering for events and functions, such as wedding receptions, parties or conferences.
  • A supply of cooking and/or preparation of food provided to a customer at the customer’s home, for example for a dinner party.
  • Delivery of cooked ready-to-eat food or meals (with or without crockery or cutlery).

Examples of supplies that are NOT in the course of catering:

  • Retail supplies of cold take-away food.
  • Retail supplies of groceries.
  • Supplies of food that require significant further preparation by the customer (see 2.2.1).

The two parts that I have highlighted in bold could well fit in with a cake baker who bakes,decorates and sells cakes surely?

Any opinions greatly appreciated.

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By Ernest N Dever
19th Jul 2011 16:53

Zero-rated

If what you're supplying is goods (a cake/cakes), rather than a wider service and those goods are neither supplied hot nor supplied for the customer to eat on your premises, then, in the case of cakes they're zero-rated.

That's because, per the legislation, food (generally) is zero-rated, unless it's not.  Among the "unless it's nots" are confectionery (which expressly doesn't include cakes) and food (goods) supplied in the course of catering (as distinct from a catering service).  Food is supplied "in the course of catering" if it's hot (on purpose) when the customer takes it away (or has it delivered), or if it's supplied to be consumed on the premises.

The two points you have highlighted refer to the supply of a catering service, freshly cooking meals at the venue (perhaps also with waitressing, etc.), as opposed to the supply of goods.

Essentially, are you selling a cooked and decorated cake? or are you selling the cooking and decorating of the cake?

The customer wants a cake, he may have in his mind the characteristics of the cake he wants and, if so, he will probably convey them to you.  In accordance with his request you cook him a cake and give it the characteristics he has requested.  But when the cake is finished, you are only supplying him with a cake.  It's just a cake, he's had no control whatsoever over when, where and exactly how that particular cake came to fruition.

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