Russell Hughes, VAT consultant, highlights the requirements for paying VAT on business to consumer sales (B2C) and business to business sales (B2B) and looks at the EU’s Four Quick Fixes that were implemented in January this year.
The UK food industry is currently thriving in an economy which has seen one of the biggest drops in consumer spending in over a century. It has been reported that Britons spent nearly £2billion on shopping in March this year, following the bulk buying spree that preceded the government lockdown to tackle the COVID-19 pandemic.
Businesses in the food and beverage industry are likely to be overwhelmed by the current demand that is being placed upon them. Therefore, whilst being pre-occupied with meeting their customers’ needs during the pandemic, it is also important that they don’t lose sight of their VAT obligations and ensure they remain compliant.
Business to consumer (B2C) sales
Companies that are in the business of selling shelf-stable products or in areas such as food supplements and vitamins are probably experiencing high demand from individual consumers across the EU.
For intra-EU B2C sales, each Member State has a threshold which once exceeded, means businesses must become VAT registered in the Member State where the goods are delivered.
Once VAT registered, they will be required to charge local VAT on the sale of their products and then file the relevant VAT declarations.
Therefore, it is important that businesses keep a close eye on thresholds and ensure that they are compliant with local VAT obligations.
Business must also navigate their way through the complexities of having to apply the different VAT rates that are used across Member States.
Whilst the majority of food products in the UK are zero-rated for VAT purposes, each Member State is different, so various reduced and super-reduced VAT rates can be applied to food.