is there VAT on coffee shops

Why Cafes and Coffee Shops are at Risk of VAT Mistakes?


We all know how people are so inclined towards coffee shops these days, especially the youth is a prominent frequenter of cafes and coffee shops. This makes you aware of the frequently asked question at the coffee shop for the popular product coffee, whether to get you a white or black coffee? Are you interested in taking away or eating in? Will you have the cold sandwich or the heated one? People often get irritated by a lot of questions that are irrelevant at times at the coffee shops. From a perspective of a customer, you and I will get annoyed after getting a paper-wrapped order even after the instructions. However, the queries are important for the taxman to be on the accurate side. Have you started to wonder about ‘is there VAT on coffee shops’ yet?

In this guide, we will cover all the relevant queries related to the questions asked at the cafes and coffee shops, VAT rules applied for takeaway food and other orders, and how can you avoid getting into trouble if you are not clear about the VAT rules for coffee shops and cafes.


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What are VAT Rules for the Takeaway Food?

At the beginning stage of VAT after the introduction of relevant rules, some of the services and products are considered zero-rated and free of certain limitations as well. This refers to the no addition of anything that is like VAT rules. Cold sandwiches are one such example. However, people often confuse the policy and take the heated products in the list as well. For your clarity of mind, cold sandwiches when not served at the coffee shop premises are taken in the list of zero-rated products only.

On the other hand, when the cold sandwiches are ordered for the dine-in and they are now served on the premises, this will not make them zero-rated. This means that you will have to pay higher rates for the dine-in option as you will be charged VAT. The standard rate will be applied. There is another important thing that you should be aware of if you frequently go to the coffee shops for your sandwiches interest. When you ask for the heated sandwiches, whether to be served on the premises for dine-in or you take away the parcel, the standard rate of VAT will be applied. The heated products instantly call for higher rates.


Is There VAT on Coffee Shops?

The rules for VAT on coffee shops are quite easy and simple to follow, however, there is still a chance for the staff to make a mistake while they are being implemented. This is because of the workload during lunch and other busier hours of the day. You should be forced for the coffee menus and added VAT charges on them. Most coffee shops make the menus so complicated that it becomes annoying on a point.

Sometimes the staff deliberately do not follow whether the customer wants to dine in and sometimes they tend to forget because of the busy hours of lunch etc. Whatever the case is, the important thing to know here is that this act is very risky for the owners to maintain the records, As this increase the chances of error in the record, overstating zero-rated sales will turn out to be damaging for your business.

When the customer is not enquired about the dine-in or takeaway for the order, the chances are the customer is being charged for the higher dine-in prices and there is a mistake in the record. Because of the popularity of coffee shops in the UK, HMRC will soon take close notice of such details and if not handled well, you will be in trouble. You are surely eager to claim the VAT, you need to pay attention to minute details for accuracy.


What are Business Owners Required to do to Avoid Mistakes?

Several factors are responsible for VAT errors at a coffee shop, sandwich bar, and bakery. Sometimes the staff is super busy with the customers and orders that they can not make it right in those hours. Another reason for such mistakes is the lack of training for the new staff members. If the turnover of the catering staff is notoriously high, this leads to the basic training for the new staff and there is no focus on the tax rules and other relevant issues.

The business owners should pay close attention to training the employees in a way that makes them realise the importance of VAT rules. Focus on the employees and make it their habit to ask the basic questions about the order as a routine on day to day basis. Moreover, you should be aware of the updated VAT sales figures in case of any changes. Drop down in dine-ins should be focused. This could be because of the more takeaways or picnic season.


The Bottom Line

Now that you have gathered a fair amount of information about ‘is there VAT on coffee shops, we can bring the discussion towards wrapping up. We can say that although the VAT rules for coffee shops and cafes are quite simple to understand and easy to implement, however, the chances of errors are still high in this process. This could be because of the lack of staff training or focus on the minute details. To avoid such mistakes, the business owners should take the responsibility to train the staff and control the staff turnover. Also, focus on the tax issues other than the basic training only. We hope after reading these few minutes read, you will be able to develop a better understanding of how to handle VAT rules professionally.


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Disclaimer: The information about ‘is there vat on coffee shops’ provided in this blog includes text and graphics of general nature. It does not intend to disregard any of the professional advice.

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