This Brief confirms HMRC's view of the VAT treat-ment of supplies of hot food made in the course of catering and has been issued following the European Court of Justice (ECJ) judgment in a number of joined German cases referred to as ‘Manfred Bog and others’. The April issue of tax.point contains a detailed summary of the ECJ's judgment in these cases.

The ECJ ruled that the supply of food or meals freshly prepared for immediate consumption from snack stalls, mobile snack bars or in cinema foyers is a supply of goods (within the meaning of Article 5 of the Sixth VAT Directive) if a qualitative examination of the entire transaction shows that the elements of supply of services preceding and accompanying the supply of the food are not predominant.

In addition, the ECJ also held that the term ‘foodstuffs’ in category 1 of Annex H to Sixth Directive 77/388 must be interpreted as also covering food and meals which have been prepared for immediate consumption by boiling, grilling, roasting, baking or other means.

The significance of the decision for German taxpayers is that certain supplies of hot food may now be eligible for the reduced rate.

HMRC have now stated their position as a result of this case. The UK treats most basic supplies of foodstuffs as zero rated but along with other specified items there is a specific exclusion from the zero-rate for supplies made in the course of catering.

UK Legislation goes further to specifically legislate for certain supplies of food that are for consumption on and off premises, including the supply of hot food.

Article 110 of VAT Directive 2006/112 allows the UK to retain this zero-rating for food as long as there are clearly defined social reasons for so doing and the supplies are for the benefit of the final consumer. As a result, HMRC's view is that there can be no extension to the zero-rate provisions, the Courts having deter-mined both that exemptions (including zero rating) must be construed strictly and any exceptions from the exemption should not be construed in such a way.

In HMRC's opinion, the UK's zero rating provisions therefore form a specific legal framework, and subject to the conditions of the derogation, the UK has discretion as to what supplies fall within those provisions. Therefore, their conclusion is that since the UK has specifically legislated to exclude supplies of hot food it is clear that the intention was, and is not, to include such supplies within the zero-rate.

HMRC therefore considers that the ECJ judgment has no implications for the UK treatment of supplies of hot food and businesses should continue to treat their supplies in accordance with published guidance.

The Brief is available on here.