EU Challenge to VAT on takeaway food
The European Court of Justice (ECJ) has recently given judgement on 4 joined German cases which could impact on the takeaway food sector.
The ruling suggests that the supply of food or meals freshly prepared for immediate consumption from snack stalls or mobile snack bars is a supply of goods rather than a supply in the course of catering , as originally provided in the legislation and European Directive. It is possible therefore that the term food can be interpreted as also including food and meals which have been produced for immediate consumption through various cooking methods and this could mean the supply could be zero rated in the UK. The ruling in Germany could cover a specific range of supplies and how it is interpreted in the UK by HMRC remains to be seen.
Although the judgement in the case is very recent there has been some comment on the potential impact in the UK in some cases suggesting a back claim may be possible, in other cases suggesting that the ruling may not be applied in the UK. The outcome will be dictated by HMRC, but businesses operating in this catering sector who provide takeaway food from a mobile stall or counter should consider their VAT position and whether this case could affect their supplies. They may wish to consider a claim if the sums are worthwhile.
Retrospective claims may be possible and if HMRC were to initially accept that claims could be made in the UK they may well seek to introduce new legislation to prevent claims which might be submitted for the last 4 years.