From 1st October 2021 to 31st March 2022 the temporarily reduced rate of VAT applied to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK will increase from 5% to 12.5%.
The initial reduced rate of 5% was in effect from 15th July 2020. The 12.5% reduced rate will be in effect from 1st October 2021 until 31st March 2022. At this point, the standard rate will again apply.
What does this mean?
- There is no change on invoices received from suppliers. The standard 20% rate of VAT will still apply
- Customers should change the configuration of some categories of sales items (in POS and Fourth) from the current reduced rate to the new reduced VAT rate
- The standard rate (currently 20%) will continue to apply to other sales items (and a few remain exempt)
What changes will apply to Fourth’s Purchasing & Inventory solutions?
- A new system VAT value will be added to all UK Inventory (formerly known as 'FnB R9') customers. This will be highlighted as a “Temporary Reduced Rate” of 12.5%.
- A new Sales Tax list will be added to all UK Recipe and Menu Engineering (formerly known as 'StarChef') customers. This will be highlighted as a “Temporary Reduced Rate” of 12.5%.
For guidance on how to apply the new rate to your recipes please see here: Inventory | Restaurants: Updating VAT Rates for Recipes in RME and Inventory
The new VAT rate will be available in the system from Wednesday, 25th August to allow for modelling against recipes.
What changes could you choose to apply to your Fourth solution?
Recipe and Menu Engineering
As this change affects the sale of food and non-alcoholic items, the sales tax can be changed to this reduced rate for applicable recipes. This will allow an updated calculation of the suggested gross profit for each dish based on the sales price entered, ensuring that menu modelling is updated to reflect the changes.
For customers using Fourth’s Inventory Solution, the system will continue to use the actual net sales value received from your point of sale provider in any cost of goods calculations reviewed at the end of the period.
Adaco/Purchasing and Inventory
Users can create their own rate schedules, and the reduced rate of 12.5% can be created and applied to recipes as required. Information on how to add a new rate can be found here: Adaco - Creating a Rate/Rate Schedule.
For customers using FnB Manager, custom VAT codes can be created within Enterprise Manager to adjust the VAT applied to recipes to the new temporary reduced 12.5%. The system will continue to use the actual net sales value received from your point of sale provider in any cost of goods calculations reviewed at the end of the period. Information on how to add custom VAT codes can be found here: FnB Live - VAT Rate Change