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Budget 2012: VAT changes for retailers/caterers


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Summary: Retailers/caterers will be particularly interested in the Chancellor's plans to make changes to the zero-rating provisions. The plans include changes to the treatment of hot takeaway food and sports drinks. Such changes will be effective from 1 October 2012.

The supply of hot takeaway food (i.e. food sold above the ambient air temperature) will be standard rated. The purpose of heating the product will no longer be relevant. The only exception from the change is the supply of freshly baked bread which will remain zero-rated - "bread" will be defined in guidance. Takeaway food supplied, at or below, the ambient air temperature will remain unaffected by the changes.

The supply of sports nutritional drinks will be standard rated, so they will be taxed in the same way as other sports drinks.

As a general comment, we consider that it is helpful that there is over 6 months' notice so that taxpayers can make sure that all processes and systems are updated to deal with the changes in the law.

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