Almost all of the sales made by a restaurant are standard rated for VAT.
Last year we had a client who refurbished his restaurant and had a VAT reclaim. During the course of enquiries VAT Inspector pointed out that Output VAT to Sale was slightly lower than 20%. The difference was of few basis points.
It was curious we had never so closely looked at the Output VAT report and were intrigued as to how this error was happening. After detailed investigation by my colleague – Neel.
We found that there had been a recent menu change and the staff who created the Menu in the EPOS system forgot to tick on one of the items that VAT is applicable.
Moral of the story
From that day we started tracking VAT on a daily basis in all our restaurant clients.
Result
Recently we took a new restaurant client and as we started doing our reconciliations immediately we realised that a similar error has been done in this restaurant. We immediately informed the management and rectified the error.
Risk
As any uncollected VAT has to be paid by the restaurant from its own pockets.
Source:
VAT notice 709/1
Roy Accountants 