HMRC recently raised a VAT enquiry into our client who operates a takeaway. The HMRC taskforce who deal with takeaways purchased a variety of dishes from our client’s premises. I disagreed with their application of the tests contained within VAT notice 709/1 which covers the VAT treatment for all those who prepare and supply food and drink ready for consumption in particular the tests at Paragraph 4.2 (See below)

My argument specifically centred around whether a food was “hot or not”

As further background I applied these tests specifically to the cooking process of “Seaweed” which is cooked cabbage, within a Chinese Takeaway but the lesson learnt is that HMRC do not always understand how foods are prepared and therefore incorrect judgements about the VAT treatment can be applied. Providing that you are armed with a detailed explanation to apply the facts and provide evidence (in this case I asked the client to send photos of each stage of the cooking and storage process).

Here is an edited explanation and below is the application of the rules.

The whole process takes half a day so this is specifically not a task that can be undertaken on a daily basis or especially on a made to order basis.

Applying this to the tests at paragraph 4.2 

“The sale of food is standard-rated if:

the food (or any part of it) is hot at the time that it is provided to the customer (“the precondition”) and one or more of the following five tests are satisfied

1.It has been heated for the purposes of enabling it to be consumed hot.

2. It has been heated to order. 

3. It has been kept hot after being heated. 

4. It is provided to a customer in packaging that retains heat.

5. It is advertised or marketed in a way that indicates that is it supplied hot.


In summary none of the tests were satisfied therefore could not be deemed to be standard rated 

as follows:

1. It is not intended to be consumed hot. It is heated as part of the frying process to turn it from the raw shredded cabbage to “crispy seaweed”.

2. It is not heated to order. It is only cooked once a week during a morning or afternoon when it will be left to cool and the excess oil is drained off to make it crispy. It is then placed into individual containers on shelves where it will remain in a dry environment until it is ordered.

3. It is not kept hot after being cooked

4.   It is packaged once cooled into the only containers that the takeaway use for serving food. It is of no significance that it retains heat as it is already cooled and crispy at the point at which it has been packaged and any heat taken on is merely from conduction from the hot source of other foods at the point of delivery.

5. It is not described on either restaurant or take-away menu as hot

If you are unsure whether you are applying the correct VAT treatment to takeaway food or have been challenged on this matter by HMRC, do not assume that they have fully appreciated the cooking process. If you would like further advice please contact Annette Stone in our Tax Team.