BU S I N E S S TA X
VAT & THE EAT OUT TO HELP OUT SCHEME nrbpqflkW==
I
run a restaurant and will be registering for the Eat Out to Help Out Scheme. Since I will be offering a discount to customers on their bill, does this mean I
will only pay VAT to HMRC on the discounted amount? ^kptboW=
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here a true discount given, VAT is only due on the discounted amount. However, for the Eat Out to Help Out Scheme, HMRC have
Total bill – £20
confirmed that VAT will still be due on the full value of
Total paid by customer = £10
the bill, before the discount has been applied. The logic
Total paid by scheme = £10 (50% of the total bill for
behind this is that whilst the customer is only paying
food and non-alcoholic drinks)
part of the bill themselves, the restaurant is still
VAT due = 0.95p – being 5% of £20
receiving full payment for the meal, by way of third party consideration from the scheme.
VAT example for meal for two people, including alcohol.
For businesses on Invoice basis for VAT, the VAT should
Food cost – £15
be accounted for on the full value of the meal in the
Alcoholic beverages – £5
VAT quarter that the meal is sold. That includes
Total bill – £20
accounting for the VAT on the refund which might not
Total paid by customer = £12.50
yet have arrived from HMRC.
Total paid by scheme = £7.50 (50% of the bill excluding alcohol)
For businesses on cash basis for VAT, the VAT should be
VAT due on food = 5% of £15 = £0.71
accounted for on each portion of the payment as it
VAT due on alcohol = 20% of £5 = £0.83
arrives. VAT on the customer payment, is accounted for
Total VAT due = £1.54
in the quarter the meal is eaten. VAT on the payment from HMRC will be accounted for as and when that
Tax Adept offers a range of services which are
payment arrives.
specifically designed to help you and your business. You can find further information on tax-
Alongside the scheme you can continue to apply the
saving measures in the Resources section of our
temporary reduced rating for VAT on these catering
website: www.taxadept.co.uk. Please contact via
supplies. Remember that the temporary reduced rate
telephone on 01444 230777, or visit our website.
doesn’t apply to sales of alcohol and neither does the Eat Out to Help Scheme. VAT example for meal for two people: Food cost – £15 Non-alcoholic beverages – £5
6
OCTOBER/NOVEMBER 2020
This article is based on current tax guidance at date of publication and may be subject to change. Any advice shared here is intended to inform rather than advise. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.
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