Share this content
32

VAT on donuts

Can anyone help with VAT on donuts and different toppings?

Didn't find your answer?

Client is setting up a donut shop where there will be a few seats to eat in but mainly takeaway.

Can anyone help me with the VAT implications - I have looked into it and it looks like there is a mixture as to whether they are sold hot/cold and what they are covered with. There is also the added implication of other things like drinks being sold.

Many thanks

Chicka

Replies (32)

Please login or register to join the discussion.

chips_at_mattersey
By Les Howard
22nd Jul 2019 08:28

You can either (1) find a way to identify the liability at Point of Sale, or (2) use the Catering Adaptation (Notice 727, chapter 7).
It is a matter of practicality as well as accuracy. I would generally opt for (2) above.

Thanks (3)
avatar
By Vile Nortin Naipaan
22nd Jul 2019 11:33

When you say you've looked into it, how have you determined that a do(ugh)nut is a cake or a biscuit and not confectionery. Start there.

My point being that any prepared food that is both (i) sweetened and (ii) normally eaten with the fingers is confectionery, unless it is a cake or a biscuit (note 5 to Group 1 of VATA 1994, Sch 8). One thing that cakes and biscuits generally have in common is that they are baked. Are do(ugh)nuts baked?

Thanks (2)
Replying to Vile Nortin Naipaan:
RLI
By lionofludesch
27th Jul 2019 10:16

Vile Nortin Naipaan wrote:
One thing that cakes and biscuits generally have in common is that they are baked. Are do(ugh)nuts baked?

A product doesn't have to be baked to qualify as a cake. Scottish snowballs are boiled and are specifically listed as zero rated. Swedish snowballs, on the other hand, are standard rated. Here we could benefit from the advice of DJKL, with his inside knowledge of both Scotland and Sweden.

I vote doughnuts are cakes. I'm surprised that they're not specifically mentioned but perhaps that means that HMRC never thought the issue was in doubt.

Compared to the food zero-rating schedule, with its exceptions and exceptions to exceptions, the construction industry is a doddle.

Thanks (2)
Replying to lionofludesch:
RLI
By lionofludesch
27th Jul 2019 10:29

https://www.thesun.co.uk/archives/politics/640190/now-vat-on-doughnuts/

Here's a 2016 bit about the "pasty tax" which fears that doughnuts could be caught. The implication is, of course, that they were zero rated.

Who'd've thought we'd get this useful information from the Sun ?

Thanks (1)
Replying to lionofludesch:
RLI
By lionofludesch
27th Jul 2019 10:45

Here's a less useful piece from Yahoo Answers.

Are doughnuts vat exempt? Thanks?

Best Answer: yes they are, all food is vat exempt..

I would challenge "all" and "exempt".

Thanks (2)
Replying to lionofludesch:
Quack
By Constantly Confused
10th Dec 2019 07:49

lionofludesch wrote:

Here's a less useful piece from Yahoo Answers.

Are doughnuts vat exempt? Thanks?

Best Answer: yes they are, all food is vat exempt..

#laughs taxily#

Thanks (0)
avatar
By Vile Nortin Naipaan
22nd Jul 2019 11:38

If we assume though that a do(ugh)nut is a cake or a biscuit (which I don't think it is), we then need to determine which it is. If it isn't a biscuit (which it definitely isn't), it doesn't matter what it gets covered in, and the analysis is then just between hot/cold/eat in/takeaway.

Drinks = beverages = standard-rated btw.

I also happen to think that do(ugh)nuts = confectionery (under the extended definition) = standard-rated, which massively simplifies your "problem".

Thanks (0)
avatar
By Vile Nortin Naipaan
22nd Jul 2019 11:44

This case may help:

http://www.bailii.org/uk/cases/UKFTT/TC/2018/TC06909.html

I think a do(ugh)nut has all the trappings of a chocolate brownie, but without making it as far as being a cake.

Thanks (0)
avatar
By paul.benny
22nd Jul 2019 12:16

Donuts are made from a yeasted batter which is deep-fried. The sweetness comes from injecting jam or similar and/or from rolling in sugar. More elaborate donuts may have a partial chocolate coating.

I would argue that donuts are cakes. They certainly pass more of the tests from the jaffa cakes decision quoted in VFOOD6260.

Thanks (1)
Replying to paul.benny:
avatar
By Vile Nortin Naipaan
22nd Jul 2019 12:35

I don't necessarily disagree, but you're relying on guidance that distinguishes a cake from a biscuit. A do(ugh)nut definitely isn't a biscuit, so we'd be past that hurdle if we were first past the hurdle of whether it is a cake or a biscuit, rather than confectionery. That's the difficulty, and I'm on the fence.

Now the do(ugh)nuts you're talking about are the ones that are usually found in the bakery section of a supermarket, which probably does get them into the cake category. I'm imagining that what the OP is describing though are more like the items that come out of the Krispy Kremes cupboard.

I am leaning more towards a cake, based on the various items that have been held to be cakes, rather than confectionery. The OP needs to document their analysis though.

For the avoidance of doubt for the less informed reading, the distinction is between:
i) confectionery, which will always be standard-rated,
ii) a biscuit, which will be standard-rated if it is wholly or partly covered in chocolate, but otherwise will be zero-rated.
iii) a cake which will be zero-rated.

Any of the above items (that are zero-rated) will become standard-rated if they are served hot (with the intention of being consumed hot, or meets any of the pasty tests) or are consumed on the premises.

Incidentally, if the do(ugh)nuts are cakes, the fact that they are sold when hot does not of itself mean that they are standard-rated. There is more to it than that.

Thanks (2)
Replying to Vile Nortin Naipaan:
avatar
By paul.benny
22nd Jul 2019 13:03

The lack of a (publicly reported) case involving Krispy Kreme provides some weak evidence that HMRC regard them as zero-rated.

Thanks (0)
Replying to paul.benny:
avatar
By Vile Nortin Naipaan
22nd Jul 2019 14:21

https://www.krispykreme.co.uk/terms-conditions

Clause 9 doesn't mean that Krispy Kremes do treat them as standard-rated, but it doesn't help resolve the dilemna.

Thanks (0)
avatar
By Roland195
22nd Jul 2019 13:32

If we devoted the same energy & resources to solving the issues of our time that we do to this deep, philosophical conundrum of what is a cake, then we would likely have peace in the Middle East and reversed Climate Change.

It's frightening when people try to look at it logically or scientifically when the last case came down "it has the mouth feel of a cake" and "You'd want to eat it from a plate sitting down".

Thanks (4)
Replying to Roland195:
avatar
By Tax Dragon
22nd Jul 2019 14:43

I blame Marie Antoinette. Coupled with all good citizens' constant quest to push at the boundaries (oh, and to eat more).

Of course doughnuts aren't cakes. But they are very likely taxed as such.

Thanks (0)
avatar
By AnnAccountant
22nd Jul 2019 13:57

Doughnuts are subject to VAT. Donuts, on the other hand, are in the realms of US sales taxes.

Thanks (3)
Replying to Vile Nortin Naipaan:
RLI
By lionofludesch
27th Jul 2019 09:59

Vile Nortin Naipaan wrote:

If only we were in Ireland:

https://www.revenue.ie/en/vat/vat-rates/search-vat-rates/D/donuts-doughn...

Reduced rate ? Does that mean that they should be charged at 5% in the UK ?

Thanks (0)
avatar
By Vile Nortin Naipaan
22nd Jul 2019 15:05

Oh god. There's this bit of me that's still going down the confectionery road. Polos, for example, are definitely confectionery.

Thanks (1)
Replying to Vile Nortin Naipaan:
avatar
By Tax Dragon
22nd Jul 2019 15:23

Even the chocolate coated deep fat fried ones?

Thanks (0)
Replying to Tax Dragon:
avatar
By Vile Nortin Naipaan
22nd Jul 2019 15:39

You can't deep fat fry a Polo and cover it in chocolate. Can you?

Thanks (0)
Replying to Vile Nortin Naipaan:
avatar
By Tax Dragon
22nd Jul 2019 16:01

I'll let you know tomorrow. (We are talking mints not cars, right?)

Thanks (1)
Replying to Tax Dragon:
avatar
By Vile Nortin Naipaan
22nd Jul 2019 16:20

Yes the ones that can be categorised with do(ugh)nuts and bagels.

Thanks (0)
Replying to Tax Dragon:
avatar
By Tax Dragon
28th Jul 2019 06:55

Tax Dragon wrote:

I'll let you know tomorrow.

Don't try this at home.

As MJShone says, ask a professional.

Thanks (1)
Replying to Vile Nortin Naipaan:
avatar
By MJShone
24th Jul 2019 08:49

Try asking a Scottish chip shop. They'll have a go at deep frying most things.

Thanks (1)
avatar
By chicka
22nd Jul 2019 21:31

Wow I didn't expect so many replies!

Thank you so much to everyone who took the time (and I'm not actually sure why I spelt doughnut wrong - not like me at all must have been a Monday morning thing).

Chicka.

Thanks (2)
avatar
By richard.snape
26th Jul 2019 10:33

You could do some practical research by visiting a branch of Krispy Kreme or Dunkin Donuts, purchasing some doughnuts to take away and asking for a VAT receipt. I am guessing they will have researched the subject thoroughly and won't be charging VAT if they can help it.

Thanks (1)
Replying to richard.snape:
RLI
By lionofludesch
27th Jul 2019 11:41

richard.snape wrote:
I am guessing they will have researched the subject thoroughly and won't be charging VAT if they can help it.

You'd be surprised what you can find on a supermarket till receipt.

I've found standard rated Jaffa Cakes, female sanitary products and nicotine replacement lozenges.

The mandarins might know but the bloke plugging in the codes on the shop floor still hasn't a clue.

Thanks (1)
avatar
By petit_dav
10th Dec 2019 07:26

VATA 1994 says that exempt from zero rated (hence standard rated) are:

'Confectionery, not including cakes or biscuits other than biscuits wholly or partly covered with chocolate or some product similar in taste and appearance.

“confectionery” includes chocolates, sweets and biscuits; drained, glaceg or crystallised fruits; and any item of sweetened prepared food which is normally eaten with the fingers.'

Donuts are "items of sweetened prepared food" that we "normally eat with fingers". We eat cakes with a spoon usually and donut is for sure not a plain biscuit.

Therefore it is STANDARD RATED! 20% VAT on it.

And yes - Krispy Kreme has standard rate on every single donut.

Thanks (1)
Replying to petit_dav:
RLI
By lionofludesch
10th Dec 2019 07:54

I have NEVER eaten a Jaffa Cake with a spoon.

Thanks (0)
Replying to lionofludesch:
Psycho
By Wilson Philips
10th Dec 2019 10:16

Me neither - a knife and fork is much easier.

Thanks (0)
Replying to lionofludesch:
avatar
By The Dullard
10th Dec 2019 10:39

That's because jaffa cakes are biscuits disguised as cakes!

Thanks (0)
Replying to The Dullard:
RLI
By lionofludesch
10th Dec 2019 11:21

Rubbish.

Clearly cakes.

Thanks (0)
Share this content