Eat Out to Help Out in August

The Chancellor has announced a new measure to support the hospitality sector, which will operate during August, and give a funded 50% discount of up to £10 per head for a meal, including non alcoholic drinks from Monday to Wednesday from participating restaurants, cafes, bars and other eligible food service establishments.

More details are awaited and key areas to be clarified include:

• Will takeaway sales be included?
• How will “participating” restaurants, cafes and bars be defined?
• What will the claims process be and which government department will run it?
• How will the refund of the discount be treated for VAT?

HMRC has now published further information about the Eat Out to Help in which it will fund a 50% discount for people buying food and non alcoholic drinks on Mondays to Wednesday during August.

Key points are:

• The registration scheme will open on 13 July
• There is no limit to the number of times a customer can use the discount
• Alcohol and service charges are excluded from the offer
• Businesses can register if they sell food for immediate consumption on the premises, provides a dining area or shares a dining area for eat-in meals and was registered with a local authority as a food business on or before 7 July.

The following are excluded from the scheme:

• Establishments only offering takeaway food
• Catering for private functions
• Hotels providing room service only
• Dining services (e.g. packaged dinner cruises)
• Mobile food vans or trailers

Additionally:

• Registration will give access to promotional materials, and your details will be available to the public
• Businesses need to be registered to start offering discounts from 3 August
• Records will have to be kept for each day on the number of people who have used the scheme, the value of the transactions and the total value of discounts given.
• Claims can be made from 7 August 
• VAT will still be payable based on the full value of the bill (though will be due at 5%)
• Any money received through the scheme will be treated as taxable income.

The Chancellor has also made a Treasury Direction in relation to the scheme.

The Charity Tax Action Group has published implications for charities on the scheme. 

If you would like to discuss this, please contact a member of our VAT team or your usual Bishop Fleming advisor in the first instance.

Check out our Business after COVID-19: Transition Knowledge Hub for more guidance and advice on managing the pandemic.