Why Do Fast Food Take Away Businesses Charge Different Prices For Eat-in and Take-Away?

We’ve all been in fast food restaurants and been asked when placing our order whether we are eating in or taking away. It’s not the cashier being nosey or allocating you a table to sit at. It is down to the businesses management of Value Added Tax (VAT). Her Majesties Revenue and Customs (HMRC) decide which products should incur VAT and which should be exempt. The business then acts as the treasury’s collection agent by charging VAT at the prevailing rate on the relevant products. The take-away or fast food retailer must always charge VAT on all food and drink consumed on the premises and on hot food taken away. HMRC have stated that any Cold take-away foods are zero rated. Cold take-away products include sandwiches, wraps, yoghurts, cakes and some cold milk based drinks. This excerpt from HMRC Catering notice should provide some clarification –

You must always charge VAT at the standard rate if you make a supply of food and drink for consumption on the premises on which it is supplied. Also, you must charge VAT at the standard rate if you supply hot take-away food (that is, food for consumption away from the premises where it is sold).

It is, therefore, important to know what ‘premises’ means as there will be times when it is not just the outlet where your business is situated.

3.2 What are ‘premises’?

For the purposes of Group 1 of Schedule 8 of the VAT Act, ‘premises’ are the areas controlled by the retailer and/or, those areas which have been specifically provided for the customer to consume the food purchased.

3.3 Evidence and apportionment

Where you make sales of cold food to be taken away from your premises, but also have on-site facilities where food can be consumed, you will need to apportion your sales of cold food between those consumed on the premises (standard-rated) and those taken-away (zero-rated). If you are unable to ascertain the correct liability at the point of sale you must retain satisfactory evidence to support a fair and reasonable apportionment. Records, and the retention of records, are explained in VAT Notice 700 and Notice 700/21 Keeping.

4.1 What is the liability of take-away food and drink?

Hot take-away food and drink is always standard-rated. Cold take-away food and drink is zero-rated, provided it is not of a type that is always standard-rated (such as crisps, sweets, beverages and bottled water).

4.2 What is take-away food and drink?

Take-away food is food sold for consumption off premises.

Barcodes.

A retail barcode is a numeric code that is able to be read by an electronic device to enable faster processing of sale items through the till.

There are many different types and formats of barcodes but in the UK the retail sector generally just use two different ones EAN13 and EAN8.

EAN 13 barcodes are the most popular and EAN 8 barcodes are only issued to smaller items that would not be able to facilitate an EAN13.

The EAN13 barcode features 12 set numbers with the 13th digit being a number that checks that the 12 digits before it are correct. The only reason these numbers are shown on the base of a barcode is to make it possible for a human to read them.

The Bar code numbers are issued by the European article numbering association to insure that no barcode is duplicated on another product.

A common misconception is that the barcode contains all the information about the product, put this is not the case it is purely just a numeric code, some parts of the bar code may be generic to a manufacturer etc. but the bar code scanner or Epos system won’t know this unless told.

What is EPoS?

EPoS is a broad generic term used toEPoS system describe a retail cash register system. The letters standing for Electronic Point of Sale, or in lay man’s terms any electronic device that can process a customer sale in a shop.

So a desktop calculator with a shoe box could be classified as an EPoS system in the same way a top of the range till could be also

However the term EPoS systems is more usually given to a higher end system that is a computer based usally with peripherals such as bar code readers attached.