Manifold (t/a Easy Living Meals on Wheels) v Revenue and Customs (VAT - ZERO-RATING : Food, etc) [2016] UKFTT 676 (TC)

FTT-Tax
Manifold (t/a Easy Living Meals on Wheels) v Revenue and Customs (VAT - ZERO-RATING : Food, etc)
[2016] UKFTT 676 (TC) · 2016-09-29
[4]In order to grapple with the principal issues on the appeal it must first be appreciated that, for the purposes of VAT on supplies of food, two crucial distinctions are made in the VATA 1994.(1) Condition of the food The first distinction relates to the condition in which the food is supplied. A distinction is drawn between supplies of hot food (eg fish and chips) and supplies of cold food (eg sandwiches.)(2) Premises The second distinction relates to the premises on which the relevant supplies of food are to be consumed. A distinction is drawn between supplies of food for consumption on the premises on which the food is supplied (eg in a restaurant, café or sandwich bar) and supplies of food for consumption elsewhere (eg in the office, in the park or at home). Two general rules and an exception should also be noted: (1) Standard rating The general rule is that supplies of hot food are standard rated. This is so whether the food supplied is to be consumed on the premises on which the supplies of the food are made or on other premises. (2) Zero rating The second rule is that, subject to exceptions, supplies of food for human consumption are zero rated.(3) Exception to zero rating If supplies of food fall within the exception, standard rating applies. The relevant exception to zero rating is supplies of food "in the course of catering." This case is about the nature and scope of the exception. The precise question for the VAT Tribunal was whether supplies of sandwiches to customers by Compass from its food outlets at the BBC Television Centre are "in the course of catering." On the scope of the expression "in the course of catering" Note (3) to Schedule 8 VATA 1994 is important. The Note deals separately with supplies of food for consumption on the premises and with supplies of hot food. Section 96(9) VATA 1994 provides that Schedule 8 is to be interpreted in accordance with the Notes contained in the Schedule …[18]The Tribunals, taxpayers and Customs have been supplied with some guidance in the legislation on the sort of thing that was to be an exception to the general rule of zero rating. The guidance is contained in Note (3) which I mentioned earlier. It states what "in the course of catering" includes. It is common ground that "includes" indicates that what follows is not meant to be an exhaustive definition, but is only illustrative of the general concept. The illustrative examples may have the effect of restricting or extending the generally accepted meaning of the expression.[20]The Note falls into 2 parts. The first part(a) relates only to the premises where the food supplied is to be consumed. If the premises on which the supply is made and the premises on which the food supplied is to be consumed are the same, the supply of the food is treated as a supply "in the course of catering." There is nothing surprising about this. It is directed at the standard case of the supplies of prepared food in a restaurant or café. Catering takes place on the premises and the food supplies are made in the course of it. It applies whether the items of food supplied to be consumed on the premises are hot or cold: both the supply of the hot soup and the supply of a bread roll to accompany the soup, are standard rated supplies of food made "in the course of catering" and as such are excepted from the general rule of zero rating. The second part of Note (3)(b) relates to the nature of the supply- that it is of hot food. Supplies of hot food are always treated as standard rated supplies of food "in the course of catering." Again this is not surprising: it is directed at the standard case of a supply of hot prepared take-away or carry-out food to be consumed by the customer not at the caterer's premises, but at home or elsewhere. Supplies of hot food for consumption on or off the supplier's premises are supplies "in the course of catering." 36. The nature of the business is such that the food was not consumed on the premises on which it was supplied and therefore Note (3)(a) has no bearing on the facts of this case. 37. The Appellant disputes that the scope of “in the course of catering” extends to include within it the supplies by the Appellant. However as Mummery LJ made clear in Compass the guidance contained within Note (3) is not exhaustive but “illustrative of the general concept” . By virtue of Note (3)(b) “a supply of anything in the course of catering includes…any supply of hot food for consumption off those premises.” In my view the preparation and delivery of hot food to customers in their homes by the Appellant clearly falls within this category. 38. There is no reason to doubt that the Appellant sought advice from HMRC’s VAT Helpline. However the advice received which was, on the Appellant’s case, incorrect cannot alter the nature of the Appellant’s supplies or the application of the legislative provisions to the facts of the case. 39. Notice 709/1 was designed to assist taxpayers in assessing whether or not their supplies should be standard or zero rated; it does not have the force of law. The Notice provides examples of supplies which are and are not in the course of catering, for instance supplies made in restaurants and cafes would fall within the former and retail supplies of cold take-away food would fall within the latter. The Appellant relies on the example given within the Notice that “supplies of food that require significant further preparation by the customer” are not supplies in the course of catering. This ignores the example of “delivery of cooked ready-to-eat food or meals (with or without crockery or cutlery)” as a supply in the course of catering. In my view the Appellant’s reliance of section 2.2.1 of the Notice is misconceived. The section falls under the heading “2.2 Catering contracts” which states:
“Any supply of food and/or drink as part of a contract for catering is standard-rated. However, a contract that merely entitles a food retailer to occupy a set of premises from which they make their supplies does not automatically determine that a supply is one of catering. In these instances it is important to consider all of the activities being carried out. 2.2.1 Food for customer preparation If you supply food that your customers must prepare themselves before it can be consumed, this is not a supply in the course of catering. This will apply whether the food is delivered to, or collected by, your customers. … For these purposes, ‘preparation’ includes…arranging food on serving plates” 40. The Notice must be read as a whole and the various subsections within their relevant context. Section 2.2.1 (customer preparation) is one of the activities referred to in the preceding paragraph that should be considered in deciding whether the supply is standard or zero rated. 41. Moreover it is clear that the supplies by the Appellant are more accurately described as “delivery of cooked ready-to-eat food or meals without crockery or cutlery” as opposed to “food that requires significant further preparation”
. In that context the example of “arranging food on serving plates” envisages more preparation that emptying the foil containers onto a dinner plate. Guidance on this issue can be found in the judgment of Keene J in Customs and Excise Commissioners v Safeway Stores plc [1997] STC 163, cited in Compass (at [42] and [43]):[42]“ Keene J expressed reservations (rightly, in my view) about placing excessive emphasis on the need for there to be a "function or activity involving a gathering of people not assembled together simply for the purpose of having a meal. In my view it is perfectly possible for a supply to be "in the course of catering" when made to a family having a meal together, though in such a case one would expect certain other of the indicia of catering to be present, such as delivery, service at the table or the provision of cutlery and other ancillary articles." (page 169c-d) There could even be catering just for an individual who wanted a cordon bleu meal catered for at home. Keene J concluded that the test was an objective one: "would the ordinary person regard what was being done as being "in the course of catering?": see page 169j. He made 3 things clear: (a) the factors mentioned by him were not intended to be exhaustive; (b) no one factor by itself is likely to be decisive; and (c) the decision is to be made in the round taking all relevant considerations into account. As to individual factors he said at page 169f-h[43]" In my judgment whether a particular supply is "in the course of catering" is a matter of fact and degree. There will be a range of factors to be taken into account by the body which is making the decision. Those factors would appear to me to include such matters as whether the food is indeed supplied in connection with an occasion or other event; the degree of preparation which remains to be carried out by the recipient is likely to be a relevant consideration, as is the presentation of the food itself-in other words is the food in a form where one would ordinarily put it on the table with no further steps being taken? One would bear in mind whether crockery and cutlery are provided along with the food itself and any other of the usual ancillary items which go with a meal. Whether it is delivered, or not, by the supplier may often be a highly material factor. Whether it is served by the supplier to those eating it, at the place where consumption occurs, will also be a relevant factor." Some of those factors are relevant to the present case. Others are not. In this case there is no particular event, activity or function, such as a party, that is being catered for. If any thing is being catered for, it is the ongoing nutritional daily requirements of people working at or visiting the BBC Television Centre. ” 42. In my view the preparation and delivery of the food by the Appellant is a supply in the course of catering. I do not accept that putting the various elements of a meal onto a dinner plate takes the supply outside the scope of catering. The degree of effort by the Appellant’s customers cannot, in my view, be said to amount to “significant” or “further preparation” ; the difficulty the individual customers have with emptying the containers due to age or infirmness is relative to the individual and not to the state of the food.43. I do not accept the Appellant’s submission that his place of business is not a “premises.” The Appellant relies on section 3.2 of Notice 709/1 in support of his contention that his place of business is not included within the exhaustive list in the Notice and therefore does not fall within the definition of premises. The Notice provides clear guidance as to the fact that “‘premises’ are the areas occupied by the retailer and/or those areas which have been specifically provided for the customer to consume the food purchased.” The Notice goes on to give examples of premises which is not intended as an exhaustive list. On an ordinary construction the area used by the Appellant to prepare the food is the premises and therefore falls within Note (3) of Group 1, Schedule 8 to VATA 1994.44. Schedule 9 VATA 1994 provides that supplies by a charity, a state-regulated private welfare institution or agency, or a public body of welfare services and of goods supplied in connection with those welfare service are exempt. The Appellant does not fall within any of these categories and whilst he may consider the services provided by the Appellant as analogous to those of a local authority, the scope of the statutory provisions is such that the Appellant’s supplies are not exempt under Schedule 9. I accepted HMRC’s submission that the documents produced by the Appellant which indicated that welfare services are provided were not documents which related to the time with which this appeal is concerned and that there was no other documentary evidence which demonstrated that the service provided by the Appellant went beyond the provision and delivery of hot meals. Conclusion45. The appeal is dismissed.46. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. JENNIFER DEAN TRIBUNAL JUDGE RELEASE DATE: 10 OCTOBER 2016

Cited in 1 later judgment