Temporary Reduction of VAT for Restaurant/Cafe Food and Beverage Sales

[Chris Corby]

A. Introduction

As you will be aware VAT on all food and non-alcoholic drinks consumed in restaurants and cafes will be temporarily reduced from the standard rate of 20% to 5% between Wednesday 15^th July 2020 and Tuesday 12^th January 2021.

As an aid to implementing this VAT reduction C&F are developing a simple program to help speed up the change process.

The program can be used to both decrease and (in January) increase the VAT rate.

B. Overview

The program will function as described below.

The user will be prompted to:

1. Select the VAT rate code to be changed (e.g. ‘S’ standard rate products at 20%)
2. Select the department/sub-department to which the ‘target’ products are assigned (i.e. food or drink items). Following which a list of products will be displayed, some or all of which require a change to their VAT.
3. Deselect any of the items listed that should not be updated (i.e. their VAT rate to be unchanged)
4. Select the new VAT rate to be applied (e.g. ‘T’ temporary rate at 5%)
5. Choose if the selected items are to have their retail sales prices reduced, to reflect the VAT change, or if sales prices are to remain the same (i.e. a greater profit margin).
6. Process the selections.

Please note that changes will have to be applied after the close of business on Tuesday 14^th July and before start of business on the 15^th. VAT code changes cannot be forward dated.

 

[Anonymous]

Thanks for the update Chris. Should prove useful.

What are the user groups interpretation of the Governments statement – VAT will be payable on the “full amount of your customers bill”. Do we deem this to mean that VAT is applied to the whole transaction amount, before the eat out to help out discount is applied?

Under the same eat out to help out government guidance, they also require those participating to keep records of the number of people who have used the scheme, the total value of transactions and the discounts given, separate for each establishment. Are any other users capturing table cover numbers/is there currently such functionality in C&F?

Lastly, can C&F explain how they will support users who might be looking to participate in this government scheme, to be able to handle the £10 per person cap?

Thanks

Tom

[Mark Wilson]

Hi Tom,

On the first point, I attended a KPMG event today and they were very clear that VAT is payable on the gross of discount value. This makes sense because we will be reimbursed with the gross of VAT amount of the discount. They were suggesting that we treated the discount as a means of payment rather than a discount, if you see what I mean.

[Dwayne Ross]

Hi Chris,

Thanks for the update on the VAT program couple of points:

– When will the program be available, are we to contact support as normal or will the new “Program” be installed onto our head office server?
– Same as Tom questions regarding the £10 per person discount scheme, any support from C&F on implementing this?

Finally any thoughts from other group members on what you may or may not do regarding the VAT drop. Are you looking to pass on some discount to the customers? At Coolings we are likely to reduce the price of some core lines like Tea / Coffee but overall will not be passing the full discount on to customers.

Dwayne

[Mark Wilson]

Hi Dwayne,

I suggest that we keep clear of any discussion of retail pricing, this should be a matter for each of us, we do not want to behave anti-competitively.

Regards,

Mark

[Chris Corby]

Hi All
The program (see screen shot attached), will be ready tomorrow (Tuesday 14th July) in the morning.
The program will allow you either to: maintain the retail price (i.e. increase margin) or reduce the retail price (i.e. pass benefit on to customer). The choice is ‘binary’ In other words you can only select to pass on the VAT saving or not, you cannot pass on a proportion of it. However, you could run the program twice, choosing a different range of items on each run; the first range could have their sales price maintained, whilst the second range has a reduced sales price. Any incremental adjustment would have to be handled via Stock File Maintenance.
Please let us know if you want this program ASAP; the cost of which is dependent on the number of takers (were just want to recover our costs). At the moment, based on present interest, the cost is £350 (ex VAT); however I anticipate that this will be reduced.
Please remember that the program must be run after close of trading on Tuesday and before start of trading on Wednesday.

Chris

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[Anonymous]

Hi Chris,

Hillier will not be taking this new program as we will use existing programs to resolve.

But would be grateful of a response to my earlier queries regarding eat out to help out.

Thanks

Tom

[Neil Brown]

Hi Chris,

Squire’s will also not be using the program as we have set up our spreadsheets ready for the change so will import those.

Regards,

Neil

[Anonymous]

Hi Chris, we will pass on the program as we have our own spreadsheets ready

Cheers

Chris

[Katie Young]

Hi Chris,

Tong will also be uploading our own spreadsheets. Thank you

We will be interested to see how we can deal with the 50% discount though.

Thanks

Katie

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