Tax tip: VAT and takeaway meal deals

Many takeaway food retailers offer meal deals that provide customers with the opportunity to buy three items together for example a cold sandwich a chocolate bar and a can of lemonade for a lower price than buying the same goods individually.

For example the goods may be offered for sale individually at £3.60 for the sandwich £1.20 for the chocolate bar and £1.20 for the can of lemonade (£6 in total) or as a meal deal for £5.

The general effect of VATA 1994 Sch 8 Group 1 is that the zero rate of VAT applies to cold food sold for consumption off the premises but the legislation includes exceptions to this general position.

In the case of the meal deal described only the sandwich qualifies for the zero rate; the standard rate applies to the chocolate...