Was the sale of takeaway food zero-rated as it was sold at the ambient air temperature?

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The taxpayer argued that the supplies of food should have been zero-rated as they were not served hot but lost his argument because for VAT purposes it only had to be served above the ambient air temperature to be standard rated.

This was an appeal against a VAT assessment for £117,254 for food sales that had been treated as zero-rated. HMRC argued that the food was served hot and was, therefore, standard rated. The appellant was a takeaway food outlet providing African and Caribbean cuisine such as rice, wraps, and curries. The food was prepared on-site, in a kitchen on a floor below the retail unit from which the food was sold.

Once the food had been prepared it was cooled to approximately 19-20C and placed into gastronorms, which are containers designed to fit into the bain marie used in the retail unit. Temperature checks of the food were taken in the kitchen. Sample temperature charts were shown, indicating that the food had reached 19-20C at approximately 10am each day.

The appellant submitted that the supplies of takeaway food should be zero-rated on the grounds that the cooked food was not hot food and fell within the zero-rating provisions.

HMRC submitted that, as the cooked food was kept in a bain marie with a constant temperature of 56C, the food was hot as it would be at a temperature above the ambient temperature, and the food has been kept hot as it was stored in an environment which provided, applied, or retained heat.

HMRC further submitted that the dominant purpose of using the bain marie was to sell food which was hot, as the food was edible after the original cooking. The provision of forks and napkins to customers indicates that the food was intended by the appellant to be consumed as sold.

‘Hot’ did not need to mean piping hot, so that the absence of steam in the retail unit did not mean that the food was not at above the ambient temperature, which is the definition of ‘hot’ in VAT legislation for these purposes.

The First-tier Tribunal (FTT) found that the food was hot as defined in the relevant legislation when it is supplied to the customer and the appeal was dismissed. 

Pegasus (Manchester) Limited v Revenue and Customs [2018] UKFTT 126 (TC)

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