VAT is also charged on other items of "sweetened and prepared food which is normally eaten with the fingers." For example: Chocolate bars. Diabetic chocolate. Liqueur chocolates.
This means that the customer does not have to pay any VAT as it is charged at a rate of 0%, but because the supply is taxable, the supplier can reclaim VAT paid on the costs of making that supply. Examples of zero-rated goods and services include most food items and children's clothing.
Well there is no VAT to pay on them unless they are wholly or partially covered in chocolate, in which case there is an extra 20% in tax. But, if the chocolate is inside the biscuit, for example a chocolate chip cookie or if it is sandwiched in between two halves of a biscuit, there is no VAT to pay.
Would it be awful to fall into a vat of chocolate?
What is the UK VAT rate for chocolate?
Full VAT on confectionary vs zero-rating on food
Under UK VAT law most food of a kind used for human consumption is zero rated. However, confectionery, including chocolates, sweets and biscuits, is liable to full VAT at 20%.
It's called VAT. Most foods and drinks in the UK are exempt from VAT, but sweets, chocolates, sports drinks, and soft drinks are standard-rated for VAT – so there's already effectively a 20 per cent sugar tax on sweets, chocolates and soft drinks.
Most confectionery will be given a standard VAT rating, while the rating of most baked goods will depend on whether they're sold hot and/or eaten on the premises. For example, a cold takeaway pastry (such as a croissant) would be exempt, while a hot pasty would be eligible for full VAT.
You must standard rate your supplies of any product designed to be eaten while frozen. Products which are supplied frozen, but have to be cooked before they can be eaten, or which have to be thawed completely before eating, are zero-rated.
Most food is zero-rated for VAT, so you don't pay VAT, but some items are standard-rated (20% VAT). This includes catering, alcoholic drinks, confectionery, crisps and savoury snacks, hot food, sports drinks, hot takeaways, ice cream, soft drinks and mineral water.
Most soft drinks (excluding milk) are subject to standard-rated VAT. Surprisingly, yes! Bottled water is subject to VAT as it's not considered a basic necessity since tap water is available. Milk is generally not subject to VAT and is zero-rated for VAT purposes.
Confectionery is an exception to the zero rate and is thus standard-rated. However, confectionery does not include cakes or biscuits, so those are zero-rated, unless the biscuit is covered with chocolate, in which case it is standard-rated.
In a nutshell restaurants must always charge VAT on everything except food that is cold and taken away, takeaway vendors do not need to charge VAT unless the food is hot and/or the customer would like to eat in perhaps a designated sitting area.
When VAT was introduced, certain goods and services were considered so essential that it was decided they should be subject to less tax, or none at all. This was done in two ways: zero rating and exemption. In the eyes of UK law, biscuits and cakes are necessities and are zero rated.
We have to charge VAT if you wish to 'eat in' which we then pass over to HMRC. We also charge a little extra in our café shops as we provide additional services.
If you run a takeaway, then you must charge VAT on all hot food and home deliveries. However, you do not need to charge VAT on cold takeaway food, unless it is consumed in a designated customer area. The VAT charges for hot food include: Food that has been heated for consumption.
Other beverages, and preparations for making them. Exceptions that are zero rated include milk and milk drinks, tea, maté, herbal tea, coffee and cocoa, preparations of yeast, meat and egg. Potato crisps roasted or salted nuts and various other savoury snack products. Products for home brewing and wine making.
Food and drink normally chargeable to VAT at the zero rate. Tea, coffee and cocoa in drinkable form. all kinds of chocolates, sweets and similar confectionery. Products normally chargeable to VAT at the reduced rate, such as biscuits, cakes, crackers and wafers, when supplied in the course of a meal.
Unlike sweets, cakes are considered to be a staple food and therefore zero-rated for VAT. Biscuits are also zero-rated unless they are a luxury item, which usually means they have chocolate on top.
Most food items that farmers produce – milk, livestock, eggs and crops – are zero-rated for VAT, which means that it is not charged on them, but the farmer is still entitled to reclaim VAT on the cost of producing those goods.
Cadbury owner Mondelez International paid absolutely no corporation tax to the UK taxman in 2017 despite making profits of £185m. The tax bill should have come to £35m. According to the Daily Mirror, who broke the story, out of 48 British subsidiary companies, Mondalez paid just £5.9m combined to HMRC.
