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Eat Out to Help Out Scheme: check your understanding

4 August 2020: As the Eat Out to Help Out Scheme launches this week, ICAEW urges businesses to ensure they understand the interaction between the discount and the VAT being charged.

HMRC has issued detailed guidance on how the Eat Out to Help Out Scheme will operate, including the accounting treatment for VAT.

The Eat Out to Help Out discount can be applied to food and/or non-alcoholic drinks purchased for immediate consumption on premises, up to a maximum discount of £10 per diner (inclusive of VAT). This includes soft drinks and/or packaged snacks if they are for immediate consumption on the premises. There is no minimum spend requirement.

The guidance includes examples covering many different situations, such as meals purchased with or without alcohol and the interaction with the temporarily-reduced VAT rate of 5% for hospitality. Details of how the £10 cap applies and its interaction with other special offers from the serving establishment are also included.

It should be noted that VAT will always be due on the whole amount of the bill, including the subsidy received from the Government.

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