VAT on cake decorating

VAT on cake decorating

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I know cake sales are zero rated but does 'making' wedding cakes to order get caught under the 'catering' rules thus making them standard rated! I have read all the HMRC help sheets but it's still not clear!

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By mrme89
25th Jul 2013 11:25

Zero rated

 

If you sell inedible cake decorations with a cake, such as silvered horseshoes or bride and groom figures with wedding cakes, you do not have to treat your supply as a mixed supply and account for VAT on the decoration unless it is clearly a separate item in its own right. For example, a toy supplied as decoration to a child’s birthday cake which is clearly intended to be kept and played with after the cake has been eaten. However you may still be able to treat the supply of the cake and the toy as a single supply if the linked goods conditions are met, see paragraph 6.1.

Below are some examples of commonly found products used as cake decorations:

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Replying to lionofludesch:
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By Shcharlesworth
25th Jul 2013 11:34

So you don't separate the making of the cake from the sale of the cake then?

How about providing cake decorating classes? Again I have looked at the HMRC help sheets but can't work out if these are exempt. The cakes and decorations supplied during the classes are zero rated but is the teaching element exempt? If so would partial exemption rules apply?

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By Steve Kesby
25th Jul 2013 11:56

Cake decorating classes...

... will be standard rated, unless they're supplied by an eligible body (like a local authority through its adult education provision).

I don't think you've got a separate supply of teaching and ingredients though; the ingredients provided are for the better enjoyment of the main supply of standard-rated tuition and take the same liability. Better to get the delegates to bring their own ingredients I'd have said.

I'd agree that on balance of the Safeway and Value Catering decisions that the supply of a wedding cake is a supply of food, rather than catering and isn't being supplied in the course of catering; meaning it's zero-rated.

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