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Food, Catering and VAT

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Food, Catering and VAT

Postby Lurker » Wed Sep 23, 2015 5:39 pm

Imagine, if you will, that there exists a group of people who like nothing more than messing about in boats.

They long ago started calling themselves a club, and are non-profit making, run purely for the benefit of the members, and without any outside commercial influences. The club has some assets (boats, oars, life jackets) but most members use their own. The club insures its members for club events.

From time to time, in order to mess about in boats, the club rents a lakeside house, at which club members come and stay for a weekend, to mess about in boats. The rental is paid for by charging the attending members fees, both a "house rental" part and a "messing about" part (so those who stay inside and do not go on the water pay less). Any surplus is not a trading profit and is ploughed back into the club.

The club members have never really thought about VAT, and try hard not to, hoping that the sporting exemption applies (mumble mumble Kennemer Golf & Country Club), and that the accommodation aspect is also exempt (mumble mumble National Association of Local Government Officers v Watkins [1934]). For the purposes of this question, assume they are right, or at least arguably right.

Here's the question: club members have traditionally brought and cooked their own food over the weekend. Now, one member (a skilled cook) is proposing to cook for the entire membership for the entire weekend, provided the club reimburses them for the raw materials. Three hot meals a day is very tempting, but one annoying member pipes up "Wouldn't that count as catering? And be VATable at the standard rate?"

The members go quiet. 3 hot meals a day, weighed against the faff of having to work out whether or not they'd have to pay VAT and come to HMRC's attention.

Is the annoying member right? Would a member catering for the weekend and the club paying for it be a VATable thing?
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Re: Food, Catering and VAT

Postby Hairyloon » Wed Sep 23, 2015 6:05 pm

Is the club so big that it exceeds the VAT threshold?
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Re: Food, Catering and VAT

Postby Lurker » Wed Sep 23, 2015 6:14 pm

Hairyloon wrote:Is the club so big that it exceeds the VAT threshold?

Assume the sporting exemption does apply: all club-related turnover is exempt and so the threshold is irrelevant.

Unless you meant "Will the catering alone result in turnover of £82,000.00 or more?", in which case the answer is no.
Last edited by Lurker on Wed Sep 23, 2015 6:40 pm, edited 1 time in total.
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Re: Food, Catering and VAT

Postby atticus » Wed Sep 23, 2015 6:28 pm

But you are talking about reimbursement of cost of ingredients. He is not selling the cooked food.
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Re: Food, Catering and VAT

Postby Lurker » Wed Sep 23, 2015 7:09 pm

Oh, wait: I've missed the point, haven't I? As long as any potential turnover is below the threshold, they don't have to be registered for VAT and so don't have to worry about paying anything to HMRC. So whether the club reimburses the cook, pays the cook beforehand, hires the cook or orders in pizza, it makes no difference. They're below the threshold and not VAT registered. The fact that catering is always VATable makes no difference.
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Re: Food, Catering and VAT

Postby atticus » Wed Sep 23, 2015 7:11 pm

Isn't the first point whether there is any vatable supply at all?
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Re: Food, Catering and VAT

Postby Lurker » Wed Sep 23, 2015 7:35 pm

atticus wrote:Isn't the first point whether there is any vatable supply at all?

Yes, you're right of course.

If a reimbursement for raw cooking materials doesn't constitute a vatable supply, the follow-up questions were going to be about whether anything would change if the club bought the food itself (to be cooked by the member-cook), or if the club advertised the weekend as catered, bought the food and had a club officer cook it to serve hot to the members.

The distinction between those scenarios seems very small to me, but I would imagine that it could make a real difference (much like the VAT on baked, warmed, reheated and "allowed to cool" products that caused Greg's the Bakers so much trouble).
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