Ensure interaction between VAT and Eat Out to Help Out is understood, ICAEW urges

The Institute of Chartered Accountants in England and Wales (ICAEW) has urged businesses to ensure that they understand the interaction between VAT and the government's Eat Out to Help Out scheme.

The Institute of Chartered Accountants in England and Wales (ICAEW) has urged businesses to ensure that they understand the interaction between VAT and the government's Eat Out to Help Out scheme.

The new Eat Out to Help Out discount is applicable to food and/or non-alcoholic drinks purchased for immediate consumption on premises, up to a maximum discount of £10 per diner, which includes VAT.

The discount can be used unlimited times and is valid Monday to Wednesday on any eat-in meal for the month of August across the UK. 

HMRC has published guidance which outlines how the scheme operates, including the accounting treatment for VAT. The guidance covers many different situations, such as food purchased with or without alcohol and the interaction with the temporary VAT rate of 5% for the hospitality sector.

In the guidance HMRC also highlights how the £10 cap applies and how it interacts with other offers provided by the serving establishment.

The ICAEW has outlined that VAT will always be due on the whole amount of the bill, including the subsidy received from the government.

The guidance can be read here.

Jacksons, Ash Tree Court, Mellors Way, Nottingham Business Park, Nottingham NG8 6PY
Jacksons, Potterdyke House, 31-33 Lombard Street, Newark, Nottinghamshire NG24 1XG

© 2021 Jacksons. All rights reserved. We use cookies on this website, you can find more information about cookies here.

Registered as Auditors and regulated for a range of investment business activities in the United Kingdom by the Association of Chartered Certified Accountants
Jacksons Business Services Limited Registered in England Company Number 4581754

Sage One Certified Adviser Sage Accountant Partner quickbooks-logo.png xero.png apple.png googleplay.png windows.png