In his Summer Economic Update, as part of the ongoing government support during the COVID-19 crisis, the Chancellor announced a new Eat Out to Help Out Scheme for restaurants to offer a discount to diners and encourage them to eat at restaurants.

How the Eat Out to Help Out Scheme works

Restaurants can offer the Eat Out to Help Out Scheme:

  • Monday to Wednesday from 3 to 31 August 2020.
  • Offering a 50% discount, up to a maximum of £10 per person, to diners for food or non-alcoholic drinks to eat or drink in.
  • There is no limit to the number of times customers can use the offer during the period of the scheme.
  • Alcohol and service charges are excluded from the offer.
  • No discount is given to someone who is not eating or drinking.
  • The discount given is claimed back from the government.
  • Businesses can register for the scheme from 13 July 2020.
  • Registration will close on 31 August.

Restuarant conditions:

  • It sells food for immediate consumption on the premises.
  • Provides its own dining area or shares a dining area with another establishment for eat-in meals.
  • Was registered as a food business with the relevant local authority on or before 7 July.

The following businesses are not eligible for this scheme: 

  • Those who only offer takeaway food or drink.
  • Those only providing catering services for private functions.
  • Those providing room service only.
  • Those provide dining services (such as packaged dinner cruises).
  • Those operating via mobile food vans or trailers.

Editorial observation

VAT

VAT registered business must charge VAT on the full amount of the meal, and fully account to HMRC for VAT due. This raises some interesting issues.

For example: a restaurant was charging £12 for a pizza meal. This pricing was originally, based on meal + drink (£10) x 20% VAT (£2).

The rate of VAT reduced to 5% from 15 July 2020. 

The business decides not to reduce its prices and it registers for the Eat Out to Help Out scheme (EOHOs).

It still charges £12 for the meal, this is now £11.43 plus VAT of 57p.

The customer pays £6.

We assume that HMRC funds the whole £6 and not just the net of VAT amount.

The business accounts for Output VAT of 57p.

 

 

 

Links

Summer Economic Update: At glance
Chancellor of the Exchequer, Rishi Sunak, made his update on Wednesday 8 July 2020. We outline his new measures designed to assist in reviving jobs and the economy following the outbreak of the Coronavirus.

COVID-19: Relief on the destruction of beer and cider
HMRC have introduced a temporary measure to help in claims for tax relief on the destruction of spoilt beer, cider or wine during the Coronavirus pandemic.

COVID-19: Tracker
UPDATE: Start here to track the latest government measures and announcements aimed at supporting businesses and individuals during the pandemic. Key action areas: Employee Job Retention Scheme and Self Employed Income Support Scheme.

COVID 19: Business Income Manual, changes to trading activities
HMRC have updated the section in their Business Income Manual which deals with ‘Crisis-driven changes to trading activities’ to specifically cover Coronavirus.

COVID-19: Coronavirus Job Retention Scheme
Coronavirus Job Retention Scheme: a cash grant that is designed to allow employers to retain staff who would otherwise be laid off.

COVID-19: Self Employed Income Support Scheme
The deadline for claiming under the first round is 13 July 2020. Claims for the second round of grants at the lower rate may be made in August with a deadline of 19 October 2020.

External links

Register your establishment for the Eat In to Help Out Scheme

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