V6.178 Liability of supplies and activities of caterers
This article and V6.179 consider key VAT issues for caterers and, in particular, for the contract catering industry. This paragraph focuses on the liability of supplies and activities of caterers including the important topic of agency. V6.179 examines VAT recovery and other practical points of relevance to catering businesses.
Food and supplies in the course of catering
There is a broad zero-rating for supplies of food which is described in V4.217–V4.225. However, supplies made in the course of catering are specifically excluded from zero-rating and are therefore normally standard-rated (or temporarily reduced-rated). The meaning of supplies made in the course of catering is explored in V4.220. The temporary reduced-rating is described in V4.424.
Catering for employees
If staff are provided with food and drink free of charge, there is no VAT due since the value of the supply is deemed to be nil. However, if the staff are charged VAT will need to be accounted for. The rules are described under 'Accommodation and catering for employees' at V3.216.
Free catering for customers, friends or family
HMRC states in VFOOD5080 that when the owner of a restaurant supplies meals to himself or his family there is a taxable supply of goods. However, HMRC regards this as a supply of food rather than catering. Therefore VAT will only be due if the goods are standard-rated food-stuffs. For the liability of foodstuffs, see V4.217–V4.225.
Where free meals or drinks are provided in exchange for an identifiable
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