Curious about how Marks and Spencer account for VAT on food

Curious about how Marks and Spencer account for...

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This question is mainly aimed at seeing if there is any VAT saving or planning that would apply to clients.

Larger M&S stores seem to have a cafe (where the VAT is straightforward) and a food supermarket area with a seating area attached.

The seating area seems to have a counter with hot drinks, cakes etc. (so standard rate VAT presumably applied to these sales). Then there is the main supermarket section where you can buy cold drinks, water, sandwiches, yoghurts, salads etc. and if you wish, go and sit at the adjoining seating area. I can't see any way (at point of sale) they know whether the food is eaten on premises or off. So presumably this is zero or standard rated, according to the type of food it is, and no account is taken of the seating area? Or is there some sort of special scheme?

So, if one of our clients had a food takeaway/food retail business and there happened to be seats and tables adjoining, what happens?

Similarly a colleague was asked at a networking meeting a couple of weeks ago, what if someone retails food (say a cold sausage roll or cold soup or whatever) and then has a seating area adjoining with a microwave and a 20p charge per 2 minutes or whatever for the microwave (could be coin operated). Would the food be zero rated and the microwave 20p be standard rated?

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By spidersong
13th Oct 2014 11:17

For the second part of your query...

Here's HMRC's view:

http://www.hmrc.gov.uk/manuals/vfoodmanual/VFOOD5180.htm

they don't accept the argument that these are two sepaprte supplies, they treat it like rotisserie (or however that's spelt) chickens and anything else cooked to be taken away hot (i.e. catering).

 

On the first part HMRC's view should be that this again is catering as to what they've agreed with M&S that's likely to be between them and M&S. I'd imagine that they gone for some sort of sampling exercise to measure how many people eat on premises and adjust takings appropriately. But I'm not M&S's VAT adviser so who knows (it may also be that HMRC haven't noticed this type of set up at the moment and so it's unexplored territory).

 

For further info HMRC's view of what constitutes premises for deciding whether catering is taking place is here:http://www.hmrc.gov.uk/manuals/vfoodmanual/VFOOD4580.htm

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