Caterers hail VAT victory on sarnies

29 June 2006
Caterers hail VAT victory on sarnies

Contract caterers' profits could be boosted by a recent court ruling on the VAT rate for pre-made sandwiches.

The sector has welcomed a ruling by the Court of Appeal that prepacked sandwiches sold in the workplace should not be subject to 17.5% VAT.

In a case brought by Compass Group, the court reversed the decision of a previous tribunal that VAT was applicable because sandwiches were made "in the course of catering" rather than as a retail transaction.

The decision could cost the taxman millions of pounds a year.

Jon Hewett, business development director at Compass division Everson Hewett, said: "Anything that puts an in-house operation on an equal footing with the high street is a positive thing."

Lexington Catering chief executive Tim West agreed. "The next exemption should be sandwiches made to order. We're still a long way from France, where a VAT rate of 5.5%, as opposed to a 21% norm, encourages people to eat at work."

Summing up, Lord Justice Mummery said: "Compass is no more making supplies of sandwiches ‘in the course of catering' than the supermarket chain with a section set aside in its store for the sale of sandwiches."

A spokesman for HM Revenue & Customs, which may appeal against the decision for a final ruling in the House of Lords, said it would "review the implications of the decision".

A Compass spokesman said the company would await the outcome of any appeal.

VAT or not to VAT?

Criteria for zero-rated status

  • Food is taken away or delivered.
  • No cutlery or condiments are supplied.
  • Supply of sandwiches rather than meals.
  • No service is supplied.

Criteria for standard-rated 17.5% status

  • Food is eaten on site.
  • Service is more than delivery.
  • Food supplied with platters, paper plates and napkins.
  • Food supplied above ambient temperature.

By Tom Bill

The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Check mark icon
Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.


Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.

trade tracker pixel tracking