Sales Tax State Activity Update - March 2009

Table for Zero! HMRC Imposes VAT on Kiosk Food Seller

This case involved the sale of cold sandwiches from kiosks located in food courts in shopping centers. The Appellant is a ‘Subway’ franchisee who sells food under that name. They were appealing a ruling by HMRC that the sale of cold sandwiches from the kiosk were subject to the standard rate of VAT.

HMRC took the position that the seating area in the food court was part of the same premises as the kiosks. Since all food consumed on the premises where the food is purchased is standard rated, the cold sandwiches sold at the kiosk would be standard rated. In order for the sale to be zero rated, the Appellant would have to show that it did not intend for the food to be consumed in the seating area.

The facts of this case were similar to those in Compass Contract Services in which the Court of Appeals held that certain supplies of cold food for consumption outside of the immediate catering outlet were zero rated. The Tribunal found that the kiosks were not the same premises as the common seating area where the food was consumed and ruled in favor of the Appellant.

---

Subscribe to CyberTax News and receive the latest indirect tax news, including rate changes, rule updates, compliance issues, and more, delivered directly to your email.

Email Address