The government made an announcement on 8 July 2020 allowing VAT registered businesses to apply a temporary 5% reduced rate of VAT to certain supplies relating to:
- · hospitality
- · hotel and holiday accommodation
- · admissions to certain attractions
The temporary reduced rate will apply to supplies that are made between 15 July 2020 and 12 January 2021.
So far so good, but the AVA has been seeking clarification for its members on whether vending is inlcuded. After much to and fro with tax experts and HMRC – we can now confirm that Catering, Foodservice and Out of Home food & drink provision is also covered by this reduction. Vending is included within this definition.
“2.4 Vending machines
Vending machine supplies follow the same general principles as food and drink supplied from catering outlets. In other words all:
· supplies of food and drink products that are standard-rated within the excepted items
(see Food products (VAT Notice 701/14)) are also standard-rated when supplied from vending machines (for example, sales of beverages or confectionery)
· supplies of food and drink from vending machines in canteens and restaurant type areas are standard-rated (or temporarily reduced rated) as supplies to be consumed on the premises where they have been supplied, an apportionment will only be allowed if the food seller can produce evidence to show that a proportion of the items of cold food (that would be eligible for zero rating) are taken away from the canteen or restaurant premises (see paragraph 3.3)
· supplies of food and drink from machines sited in thoroughfares and areas not designated for the consumption of food follow the liability of the product sold (see Food products (VAT Notice 701/14))”
So – as over 80% of AVA member’s vending machines are located in workplace sites, i.e. definitely not ‘take away’, then they qualify. In reality many leisure and public access sites currently have restricted access. Also many Business & Industry (B&I) sites are not running at full capacity.
This reduction in VAT covers hot drinks (tea, coffee etc), soft drinks and food. NOT standard
format ‘grocery items’ such as confectionery and snacks.
AVA Chief Executive, David Llewellyn says: “As with all tax legislation, this has not been a straightforward exercise in getting answers from HM Treasury and HMRC. There is no expectation or legislation from Government that retail prices should be reduced. This is seen as an aid to struggling businesses. Applying different VAT rates across your business will take some accounting effort, but every little helps! As always, you should check the application of this reduction with your own accountants/advisors”.