Altan Kemal is a Chartered Accountant. He came to the UK in 1973, graduating in Business Management before qualifying and starting a career in accountancy. He subsequently founded his own London-based firm in 1983, named Alton & Co. (Chartered Accountants & Statutory Auditors). Kemal currently has a large team of qualified staff who are all adept in advising a variety of clients including those in the food and catering industries. Altan has worked with hundreds of small and medium businesses as well as big companies in his career and has seen how many of his clients have thrived in the food and drink sector. Throughout his time as a Londoner, he has witnessed the Kebab Industry ’s growth over the past 35 years and has advised many entrepreneurs and firms working in that field. His clients include restaurant chains, catering companies, and food and drink suppliers from all-over Britain. Altan is happy to answer any questions from BritShish readers. You can send him your questions via firstname.lastname@example.org
1) VAT can be confusing for many food business owners. Which foods are VAT liable and which are not?
You are right in saying that this is a very confusing area and there are very detailed rules governing this area. In very simplistic terms, everything bought and consumed in the premises is VATable at the standard rate irrespective of whether it is hot or cold. Hot takeaway food that has been heated for the purpose of supplying hot is always standardrated. Cold takeaway food intended & packaged to be consumed cold is zero-rated. Cold takeaway food is zero-rated provided it is not of a type that is always standard rated such as crisps, sweets, beverage and bottled water. Hot drinks are standard rated.
2) Many restaurants add a service charge to the bill. Do they have to report service charges and tips?
If payments of Service Charges are compulsory then they are a standard rated supply – for example when you have to pay service charges for large group bookings. However, if the payment is optional/discretionary and it mentions on either your menu or the receipt you give to the customer that it is optional, then it is a zero-rated supply. Tips by their very nature are optional so are zero-rated as well.
3) There are always rumors that HMRC is targeting restaurants and takeaway businesses for tax evasion. Could you shed some light on this matter?
Unfortunately this is true. As this sector generally deals with cash, it is very tempting not to declare all of your sales. This, unfortunately, is short term thinking as the HMRC have access to very detailed information from a variety of sources. If one is declaring all of their sales and expenses correctly then they should not be worried about these campaigns anyway