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Post Info TOPIC: VAT on food


Expert

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VAT on food


I have a possible new client (well, sort of - an ex-client with a new business) but I'm currently in two minds as to whether to take it on. (One reason is how much trouble I had getting paperwork and information out of them previously - turning a small job into a much bigger one; although to be fair, my bank account didn't complain!)

I'm looking at their (cloudy) accounts now to help me decide, and as well as a few issues that would need to be sorted, I've spotted something that's outside my sphere of knowledge, re VAT on food. (I should add that one part of the business is that they're selling diet food).

Obviously, different types of food are treated differently for VAT - some have no VAT, some do. This is clearly reflected on their purchase invoices.

Looking at their sales data, though, I can't immediately see any VAT on any invoices - so at first glance, it looks as though either no food with VAT is being sold (very unlikely) or their simply assuming all food sales = no VAT. Glancing at a few invoices, the wording is too vague for me to be able to say if any of it (and therefore how much) should have VAT.

Is there any simple rule/formula that can be applied to declare VAT on a proportion of their sales, in order to simplify things? I suspect not, but as I said - not my area.

TBH, while I could do with the money, I'm thinking of turning this job down; as well as an area I'm not comfortable in, there's the issue of the trouble I had getting info etc from them before.



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Vince M Hudd - Soft Rock Software

(I only came here looking for fellow apiarists...)



Master Book-keeper

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Is there any simple rule/formula that can be applied to declare VAT on a proportion of their sales, in order to simplify things? I suspect not, but as I said - not my area.

Hi Vince. not to my knowledge, I think the only time you can proportion it is if you are putting together a package eg hamper, and there is a mix of VAT and non VAT, but you would still need to know what items are VATable etc.

Are they selling cold food that is taken away or sold by post? Usually non vatable. Not sure if you've looked at this but seems reasonably comprehensive. There's a small section on slimmers food at 4.5

https://www.gov.uk/guidance/food-products-and-vat-notice-70114



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John

Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



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May be worth looking at one of the retail schemes.... direct calculation comes to mind, if you make a small proportion of sales at one vat rate and the majority at another rate ?


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Domino VAT Accounting Ltd



Master Book-keeper

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Hi Vince
Food - for thought! Im sure you will be aware of the is it a cake or is a biscuit Jaffa Cakes case. That in a cake case indicates how complex this can be.

Lots of issues, not least the content of their normal food range but any 'sepcialised' foods can make it a lot more complex. Once you have looked at the link from John and that suggested by Julie I would also suggest a gander round the HMRC manual as your next spot to have a look, plus the case law therein mentioned (I think the case law list will just keep on growing)

www.gov.uk/hmrc-internal-manuals/vat-food/vfood2700

Example of stuff Ive come across before - milkshakes =zero rated. Milkshake flavouring = standard rated (I dont even know if this is still the case!).

I would say - check if they have had a VAT expert involved in any way in how they charge. If they havent, get one! Then the issue doesnt fall to you (plus the other obvious benefits for their business).

I normally say go with your gut on taking a client on. But I would look to see if you can see any evidence of them improving since your last involvement (VAT on time/Accounts on time/chat with existing advisors/responses to questions you could put to them based on your preliminary software checks). An interesting one by the sounds of it! (and could as you say, be more remunerative - oh and build in BIG extra fees to cover ANY delays in paperwork provision).



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Joanne

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position (and my that I dont mean with HMRC)



Expert

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A key part of the problem is that I wouldn't be invoicing - so unless there's a magic formula I can apply come VAT time, I'd have to train them to do it right, and in based on my previous experience with the business owners, I doubt I'll be able to do that.

(To illustrate the issue, looking at one of their invoices, one line is just described as "bars" and there is no VAT added. But bars of what? What's the betting they are "chocolate or carob-coated biscuits or sweetened cereal or compressed fruit bars" - which is the short example list at the end of section 4.5 on the link John gave.)

I think my best option will be to say no on this one, even though the money would be handy - to that end (having tried a couple of times to ring them) I've sent them a polite email to say sorry, but no.

Thanks for the help, peeps.

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Vince M Hudd - Soft Rock Software

(I only came here looking for fellow apiarists...)



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You may be interested in a blog that I prepared on this called Takeaway VAT!



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Senior Member

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I can see that you decided to turn this down but if it arises in future I think it really is a case of educating a client on this one.
I deal with a few farm shops and while they sell a lot of fruit/veg they also sell prepared food and many other items which do involve VAT. The way they deal with it is to have programmable tills which I have offered to help with set up although they have done the jobs themselves. That way any member of staff can hopefully hit the right button so we have it correctly analysed.


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Master Book-keeper

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lots to learn wrote:

That way any member of staff can hopefully hit the right button so we have it correctly analysed.


Therein lies the rub.

That and programmin it correctly in the first place, seen some right howlers!



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Joanne

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position (and my that I dont mean with HMRC)



Expert

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FWIW, the non-client was selling dietary food products mail order, not over the counter. It would (as Valerie says) be a case of educating them - but my experience of the people involved from when they were a client in a previous business tells me that would be not so much an uphill struggle as an attempt to climb k-2 without any equipment. While facing downwards. And on the wrong continent.

(And as a mail order outfit, the closest equivalent to a programmable till would be using a stock/product database with the correct VAT rate set for each item, so that it is automagically included on sales invoices, but - although it was two or three months ago, so I could be misremembering - when I looked at their cloudy system's invoices, I think they were just using free-form invoices.)

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Vince M Hudd - Soft Rock Software

(I only came here looking for fellow apiarists...)

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