In Olive Garden Catering Ltd v HMRC [2018] TC06595, the FTT found that the appellant was providing separate supplies of food and services, but the services provided were standard rated catering services.
- OGC contacted with the University of Aberdeen (UOA) to provide food after UOA ceased operating its own food production.
- As well as providing food for events, OGC produced cook chill food to UOA specifications, at OGC’s premises and brought the food to the UOA site. The food was regenerated by OGC staff under UOA supervision. This was then served for dinners at the UOA.
- HMRC refused an Error correction claim by OGC of £61,663:
- This claim related to cook-chill food provided by OGC to UOA.
- £23,176 related to VAT previously charged on the food element by OGC. OGC changed its view believing this to be zero-rated.
- £38,485 related to the Supply of staff. OGC made the claim on the basis that the costs fell within a catering staff wage concession such that no VAT was payable.
- HMRC’s view was that the supply was standard rated Catering, as originally accounted for by OGC.
- HMRC also assessed OGC for £171,951 of output VAT:
- UOA ordered other food directly from wholesalers, but under agreement with OGC, OGC paid the wholesalers and recharged UOA.
- OGC recharged the cost to UOA treating it as zero-rated food.
- HMRC’s view was that it was part of the Single supply of standard rated catering with the cook-chill food.
The FTT allowed the appeal in part:
- The repayment claim failed:
- If UOA staff had carried out the regeneration then OGC would only have provided cook chill food and zero-rating would have applied. But OGC carried out the regeneration of the food.
- OGC staff were responsible for the cleanliness of the kitchen at UOA, it was
- The supply of staff could only have qualified for the concession if they were provided in the course of catering so to claim there was no supply of catering, but that the staff costs were subject to the catering concession were incompatible.
- The economic reality is that there is a single supply of catering which is standard rated.
- The output VAT was not due:
- There was not a single supply of catering in respect of the wholesale food.
- The requirement for OGC to provide the food to UOA was not incidental to the rest of the catering contract.
- UOA ordered the food, carried out stock checks, took delivery, checked supplier invoices, and approved the recharges by OGC.
- For the food procurement, UOA were acting as Agent for OGC as principal. For the catering/cooking, OGC was acting as agent.
- The invoices for the recharged food vastly outweighed the catering charges.
- The food was a separate supply and was therefore zero-rated.
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