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United Kingdom VAT & Duties Tribunals Decisions
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Cite as:  UKVAT V19977
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VALUE ADDED TAX – Flat rate scheme – Whether selling ice cream and milkshakes from a kiosk in a public square was retailing or catering? – Held retailing on the facts – appeal allowed
LONDON TRIBUNAL CENTRE LON/2006/0010
THE CHILLY WIZARD ICE CREAM CO LTD Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY'S
REVENUE AND CUSTOMS Respondents
Tribunal: ADRIAN SHIPWRIGHT (Chairman)
Sitting in public in London on 22 September 2006
Mr T Laine, director, for the Appellant
Mr S Singh, Counsel, instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2006
(a) provide for the appropriate percentage to be determined by reference to the category of business that a person is expected, on reasonable grounds, to carry on in a particular period;…"
(1) Where, at a relevant date, a flat-rate trader is expected, on reasonable grounds, to carry on business in more than one category in the period concerned, paragraph (3) below shall apply.
(3) He shall be regarded as being expected, on reasonable grounds, to carry on that category of business which is expected, on reasonable grounds, to be his main business activity in that period.
(4) In paragraph (3) above, his main business activity in a period is to be determined by reference to the respective proportions of his relevant turnover expected, on reasonable grounds, to be generated by each business activity expected, on reasonable grounds, to be carried on in the period.
Retailing food, confectionery, tobacco, newspapers or children's clothing
|Farming or agriculture that is not listed elsewhere
Retailing that is not listed elsewhere
Wholesaling agricultural products
|Retailing pharmaceuticals, medical goods, cosmetics or toiletries
Retailing vehicles or fuel
Sport or recreation
Wholesaling that is not listed elsewhere
Library, archive, museum or other cultural activity
|General building or construction services*
Hiring or renting goods
Manufacturing that is not listed elsewhere. Manufacturing yarn, textiles or clothing
Repairing personal or household goods
|Forestry or fishing. Mining or quarrying
Transport of storage, including couriers, freight, removals and taxis
Dealing in waste or scrap
Hotel or accommodation
Photography. Publishing. Veterinary medicine
|Any other activity not listed elsewhere
Investigation or security
Manufacturing fabricated metal products
|Boarding or care of animals
Film, radio, television or video production
|Business services that are not listed elsewhere
Computer repair services. Entertainment or journalism
Estate agency or property management services. Laundry or dry-cleaning services. Secretarial services
|Catering services, including restaurants and takeaways
Hairdressing or other beauty treatment services
Real estate activity not listed elsewhere
* "Labour-only building or construction services" means building or construction services where the value of materials supplied is less than 10 per cent of relevant turnover from such services; any other building or construction services are "general building or construction services".
(1) The Appellant, a limited company, registered for VAT in November 2005.
(2) The Appellant applied to join the Flat Rate Scheme under the retailing classification. HMRC approved this application from the date of registration.
(3) Following a visit from an HMRC officer this classification was amended by HMRC to 'catering' with a consequent increase in the amount said to be due to HMRC.
(4) The Appellant requested a reconsideration. HMRC's amendment was upheld on reconsideration. This is the disputed decision appealed against.
(5) It is said in the Reconsideration Letter:
"I understand your business provides a kiosk in Christchurch for customers to approach and purchase ice cream and milkshakes which may be taken away".
This is not disputed and we accept.
(6) The Appellant sells ice cream and milkshakes (which the Parties accept are foods suitable for human consumption) by way of retail in Saxon Square, Christchurch. We find this as a primary fact.
(7) There is thus a supply of food etc consisting of the supply of ice cream and milkshakes.
(8) Two tables and six chairs are provided for which the Appellant makes payment. There was no evidence as to how many customers (if any) made use of them.
(9) The ice cream and milkshakes were prepared by Mr Laine.
(10) The planning permission for the kiosk was for use within the category A1 and not A3/A5. Accordingly, hot food could not be sold from the kiosk.
(11) There was no closed group of users as the square was open to the public.
(12) There was no element of service of food etc in what was done. It was not 'catering services' that were provided.
(13) The supply of ice cream and milkshakes was not in connection with a specific event or occasion such as a wedding reception. We find that shopping, in this context, was not such an occasion.
(14) No further preparation was involved to eat or drink ice cream and milkshakes other to open the relevant packaging.
Submissions of the Parties in outline
Appellant's submissions in outline
"Takeaway [Noun] – A restaurant or shop selling cooked food to be eaten elsewhere …"
He argued that the Appellant was neither of these. It was not a restaurant nor a shop selling hot food. It could not do so as it did not have the requisite permissions.
HMRC's submissions in outline
(1) The milk shakes were prepared at the Kiosk and the ice cream was prepared by Mr Laine;
(2) Two tables and six chairs were provided for which the Appellant made payment and which were available to the Appellant's customers;
(3) As one can take away cold food the Appellant was running a takeaway;
(4) The margin the Appellant would be taxed on would not be high enough to be equitable as much of his inputs would have been zero rated;
(5) The wrong amount of tax was accordingly paid if the Appellant was treated as a retailer (a 10% difference in rate);
(6) Accordingly, adopting a purposive approach (to use the chairman's phrase) the correct categorisation was as "Catering services, including restaurants and takeaways";
(7) Consequently, the correct categorisation was as catering not retailing and the higher amount of VAT was due.
(1) Is there catering here?
(2) Is there a takeaway here?
(3) Is retailing an appropriate categorisation?
Is there catering here?
i. General Matters
Customs and Excise Comrs v Cope  STC 532
Armstrong v Customs and Excise Comrs  VATTR 53
Prêt à Manger
ii Case Law
a. "Whether or not something is catering is a matter of fact and degree. The case law makes it plain that there is no definition of "catering" and that it would be unhelpful to seek to provide one. It is something one knows when one sees it.
b. The starting point in considering the ordinary meaning of catering is the Cope case. We have carefully considered this case and the other cases referred to above.
c. From the case law we draw the following principles:
(a) The word "Catering" is to be given its ordinary meaning;
(b) Catering often involves service and provision of glasses and cutlery for a time;
(c) Restricted access can be an indication of catering but it is not conclusive of the matter. It depends on the particular circumstances;
(d) Where there is a link or nexus between the supply of food and the function or activity to which access is restricted this may be an indication of catering. However, it is not conclusive as the Bishop case involving RNAS Culdrose shows and … E&G Catering. If the food is ancillary or incidental to the main function it is likely to be catering (eg a wedding reception);
(e) It is a question of fact and degree in every case. Each case depends on its own facts (cf Peter Smith J in Whitbread at paragraphs 18 and 19)".
iii. Catering – what is the proper approach?
"As was said by the tribunal in the case of Armstrong v Customs and Excise Comrs  VATTR 53 at 62: 'Taking the word in its ordinary and popular meaning, we think an ordinary person can recognise catering when he sees it.' I regard that as being an appropriate definition, in so far as one can be given, of the meaning of that phrase 'in the course of catering'. The tribunal in the Armstrong decision went on to refer to the decision of Sir Douglas Frank QC, sitting as a deputy High Court judge, in the case of Customs and Excise Comrs v Cope  STC 532. In the course of that judgment Sir Douglas Frank QC referred (at 538) to a popular meaning of the word 'catering' as being—
'… the provision of food incidental to some other activity, usually of a sporting, business, entertainment or social character. Thus, it covers food supplied at football matches, race meetings, wedding receptions, exhibitions and theatres.'...
In my judgment whether a particular supply is 'in the course of catering' is a matter of fact and degree. There will be a range of factors to be taken into account by the body which is making the decision. Those factors would seem to me to include such matters as whether the food is indeed supplied in connection with an occasion or other event; the degree of preparation which remains to be carried out by the recipient is likely to be a relevant consideration, as is the presentation of the food itself—in other words, is the food in a form where one would ordinarily put it on the table with no further steps being taken? One would want to bear in mind whether crockery and cutlery are provided along with the food itself and any other of the usual ancillary items which go with a meal. Whether it is delivered, or not, by the supplier may often be a highly material factor. Whether it is served by the supplier to those eating it, at the place where consumption occurs, will also be a relevant factor.
I do not propose to list any more factors. The ones I have listed are not intended to be exhaustive. I recognise there may well be other considerations which will arise in the individual case. I share the tribunal's view in this appeal that no one factor by itself is likely to be decisive and it would be wrong for the tribunal to focus upon one factor in any case to the exclusion of all others. These are decisions to be made in the round, taking account of all considerations of the kind to which I have referred.
The test itself has to be an objective one: would the ordinary person regard what was being done as being 'in the course of catering'?"
(a) Whether the food is indeed supplied in connection with an occasion or other event
The ice cream and milk shakes are not supplied in connection with an occasion or other event such as a race meeting or wedding reception. Shopping in these circumstances is not such an occasion.
(b) The degree of preparation which remains to be carried out by the recipient.
The degree of preparation which remains to be carried out by the recipient is merely to eat or drink the ice cream or milk shake. This is no different from buying an ice cream or drink in a retailers such as a newsagent which is not treated as catering.
(c) The presentation of the food itself—in other words, is the food in a form where one would ordinarily put it on the table with no further steps being taken?
Here it is in a form in which it could be eaten or drunk without more than opening the wrapping etc, as was the case in Prêt.
(d) Whether crockery and cutlery are provided along with the food itself and any other of the usual ancillary items which go with a meal
There is packaging to contain the ice cream or milk shake but crockery is not provided. No cutlery is provided along with the food itself in the way it is in a restaurant or at a social occasion. There is no element of bailment for temporary use as say of a metal knife or fork supplied at a wedding reception or party. Nothing like salt and pepper is provided for the purchaser.
(e) Whether it is delivered, or not, by the supplier may often be a highly material factor
The ice cream or milk shakes in question were not delivered but handed to the customer at the kiosk. There was no delivery or waitress service.
(f) Whether it is served by the supplier to those eating it, at the place where consumption occurs
The ice cream and milk shakes were not served by the supplier to those eating it, at the place where consumption occurs in respect of the items in issue here. There was no waitress or silver service.
iv. Conclusion on "Catering"
(i) On the evidence before us no ordinary person would consider that there was a supply of catering in the ordinary meaning of the word.
(ii) There is no element of service in what is done as there would be in a restaurant. There was no supply of 'catering services'.
(iii) There is no common purpose here as there is at a sporting or social function.
(iv) There is no nexus of the requisite type between the ice cream and milkshakes and presence at Saxon Square;
(v) The supplies here were of goods not services to individuals to meet their need for refreshment or sustenance. They were not part of some larger experience or enjoyment of Saxon Square or of shopping to be shared with others.
Is there a restaurant or takeaway?
Is there a takeaway here?
Is retailing an appropriate categorisation?
(1) there is no catering and no supply of 'catering services' here;
(2) there is no restaurant here;
(3) there is no takeaway here;
(4) retailing is an appropriate categorisation and catering is not.
RELEASE DATE: 12 January 2007