VAT and Eat Out to Help Out Scheme

Eat Out to Help Out

HMRC have confirmed that under the Eat Out to Help Out Scheme, VAT will still be due on the full value of the bill. 


This is due to the restaurant still receiving full consideration for the supply, even though the customer is only paying part of the bill.  


VATSC05830 says – In respect of the supply of goods or services, other than as referred to in Articles 74 to 77, the taxable amount shall include everything which constitutes consideration obtained from the customer or a third party, including subsidies directly linked to the price of supply.


The VAT should be paid in full within the correct period in which the transaction takes place. You will be allowed to make a manual adjustment to your records to reflect the VAT that is due if your point of sale system would not otherwise allow you to reflect the VAT due accurately.


Alongside the Eat Out to Help Out scheme you can continue to apply the temporary reduced rating for VAT on these catering supplies.


The temporary reduced rate and the Eat Out to Help Out Scheme doesn’t apply to sales of alcohol.


VAT example for meal for two people:


Food cost – £15

Non-alcoholic beverages – £5

Total bill – £20

Total paid by customer = £10

Total paid by scheme = £10


VAT due = 1/21 of £20 = 0.95p (1/21 is the VAT fraction to extract 5% VAT from a VAT inclusive price)


Within the guidance on Eat Out to Help Out, HMRC have mentioned that they will accept estimated returns if you are unable to calculate the adjustment in the correct period, and then correct the VAT on your next return.