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Why can't the bill say EAT IN or TAKE OUT in big letters at the top. It is fine when the bill details the VAT, as in two Pret a Manger bills I looked at just before your article was published. However, with the simplified under £250 till receipt it is impossible to know the VAT position and that is even when detail of what was purchased is provided. Great article by the way on yet another VAT situation that doesn't work in practice, exactly for the reasons you have outlined.
What happens if the customer says Take Out but then "changes their mind" before leaving the store and takes a seat?
I am sure it happens quite frequently. What's HMRC's stance on this?
I worked at Pret, this happens all the time, at times on purpose. We couldn't say anything as the customer is always right kind of thing.
expret.org
Good article explaining the situation. I hope you claimed the lunches as business expenses for the purposes of the article!
Another situation where the VAT rules are just plain stupid and get in the way of business.
Hopefully post Brexit some future government will do away with VAT and shift to a simple 'stuff sold to consumer' sales tax that is simply a charge to business on the relevant turnover.
Quite. But far too straightforward a solution for our overbearing self important law makers. It’s where the Office of Tax Simplification should have started and where they really could have done some important useful work.
I hope so too. Whilst VAT blight's every business, in most business to business cases it washes its face. The main effect of VAT is as a consumer sales tax. There are exceptions mostly where exempt or partially exempt businesses can't claim back all of the input tax. These type of businesses are usually performing an essential service, such as, education, charities or medical. By pitching a sales tax by type of business, it could be made to work and those already exempted could continue to be. Nobody would have to worry about claiming back input tax, which is the greatest business inefficiency in the current system.
Welcome to the real world where the ludicrous distinction between food items causes complications that are not always overcome for small businesses who try their best but ultimately would just rely on hoping for the best, giving an inspector a till roll, and denying everything if queried.
What is the vat position on a cold sandwich when you eat outside on chairs provided by the sandwich shop?
Does eat in definitions cover the total premises or the covered premises
That's a different can of worms. I heard of a beach café that claimed the whole beach as its premises to mitigate exempt income from its attached amusement arcade.
That's a different can of worms. I heard of a beach café that claimed the whole beach as its premises to mitigate exempt income from its attached amusement arcade.
Perfect opportunity for the Office of Tax Simplification to, post-Brexit, massively simplify the UK's VAT rules.
Well if the UK government wasn't so greedy in trying to squeeze every last penny out of us citizens though whatever means they can, we would not have to worry about eating food inside premises or outside and whether the drinks were hot or not.
Unfortunately by publishing this article, this matter will now be brought to the tax-man's attention and it will only be a matter of time before he/she makes life hell for fast food businesses.
Don't forget, a business is set up to generate some income for it's owners, provide employment for its staff members and also a service to local residents not forgetting the high rent and council rates the owner has to pay. It's primary purpose is NOT to generate more and more tax revenue for our greedy, uncaring government.
Maybe articles should focus on how the government wastes the precious taxes we pay on useless ventures like the new £3bn aircraft carrier which is on a useless 11 week cruise across the Atlantic with two F-35 fighters on board just to show off.
https://www.standard.co.uk/news/uk/hms-queen-elizabeth-royal-navys-new-3...
Or how about half of the Royal Navy's submarines now sitting in docks due to cracks and about to be taken out of service?
https://www.express.co.uk/news/uk/766212/Nuclear-warning-royal-navy-subm...
It is no use taxing citizens out of every miserable penny they earn (even on their sandwiches) when the government should not be wasting billions in one hit every year.
If we citizens showed extreme resentment at each new tax that is introduced, it might stop our government from designing ever new ingenious schemes to tax us even more and focus on their wasteful tendencies.
This is a perfect example of "its not my money". we had a client who had been a Mayor of his borough who always queried our bills. I lived in his borough and asked him why he was so frugal with oour council tax. The answer was "its not my money"
In practice this law is al but impossible to implement in the real world for businesess big and small alike. I "sense check" the total numbers each year with business owners, and question any quarter which looks out of line with seasonal trends.
Very often the reason for an anomoly is just a new staff person who had no idea about VAT. And, as this thread correctly states, in any decent cafe the menu options are so extensive that if your staff have got time to worry about the VAT button in the lunch hours then you are probably losing money by not being busy enough.
Is this an EU regulation? The reason I doubt this is the pasty tax Budget, when numpty Osborne would have had all my bakery clients sticking a thermometer in each batch to see if it was 20% or 0%.
I somehow doubt we'll make better laws without the EU. The majority of the daft laws I have disliked - IR35, 17% corporation tax rate, poll tax, pasty tax, dividend tax credit, Universal Credit 6 to 8 week wait for example - were 100% made in the UK.
Is this really an issue? If it were then wouldn’t an inspector be knocking on door of every food outlet in the country as we speak?
I think the very fact these errors do happen is because owners know HMRC can’t expect them to micromanage the till operator and get every sale 100% perfect for VAT - for the very reasons you listed.
I wouldn’t be worried, but then again I’m not an owner of such a business!
No doubt they will wait six years so the case is well worth following up for the missing VAT. It isn't that long ago that Fish and Chip shops were targeted. HMRC, backed up by the Money Laundering Regulations, do single out cash based businesses.
The main reason though isn't any of those: it's the fact that the VAT regulations are ridiculously over-complex. If people can't cope dealing with VAT correctly in their day-to-day jobs, is it really the fault with them or their training, or are we asking too much?
Typical, complicated rules, it does not surprise me you recorded a 60% sample failure rate. But it just shows a lot of braininess and business owners carry on regardless.
Just step back from it, how have we got in this situation if similar items of food is consumed on or of the premises its taxed different.
Hi Neil,
Have only just seen this article.
Very interesting, have to say in our experience the team members default to dine in therefore penalising us as opposed to HMRC.
What is your take on alternative milks, I have read that HMRC lost a case to Alpro and that soya etc is not classed as a ‘beverage’ and is therefore zero rated if it is 45% or more of the drink!!
How does that impact a soya latte for instance?
Many Thanks