On 1st April 2022, the temporarily reduced rate of 12.5% VAT applied to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK is due to be replaced with the standard 20% rate.
The temporarily reduced rate of 12.5% was in effect from 1st October 2021.
Please note: this article reflects Fourth's current understanding of the coming VAT changes. If the UK government decides to extend the duration of the reduced rate then you will not need to make the amendments described below on 1st April (and the FnB update will not occur). Please refer to government sources and the national press.
What does this mean?
- There is no change on invoices received from suppliers. The standard 20% rate of VAT will still apply (as it always has)
- Customers should change the configuration of some categories of sales items (in POS and Fourth) from the current reduced rate back to the standard VAT rate of 20%
- The standard rate will have continued to apply to other sales items (and a few remain exempt)
What changes will apply to Fourth’s Purchasing & Inventory solutions?
- For all UK Inventory (formerly known as 'FnB R9') customers, the existing system "Standard Rate" of 20% is still available
- For all UK Recipe and Menu Engineering (formerly known as 'StarChef') customers, the existing "Standard Rate" of 20% is still available
For guidance on how to change rates for your recipes please see here: Inventory | Restaurants: Updating VAT Rates for Recipes in RME and Inventory
- For all UK FnB Live customers, a mass VAT update will take place on the day (currently 1st April 2022) of the return to the standard 20% VAT rate
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 the standard 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 and manage their own rate schedules, and the standard rate of 20% can be reapplied to recipes as required. Information on how to add a new rate can be found here: Adaco - Creating a Rate/Rate Schedule.
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.