Category: HMRC

Restaurant industry has one of the highest levels of staff turnover. Restaurant Managers and Chefs are so busy with day to day operations that this area gets lags behind.

Main hurdles we see from managers:

1 – Lots of paperwork to be collected and issued. How to track them.

2 – Lack of knowledge on which paperwork to collect , when to collect and what to check.

We have prepared a quick MANAGER’S CHECKLIST for the recruiting managers to use while on-boarding staff. This is one of the series of documents we have to help the clients fulfill their obligations relating to `Right to work` checks.

One of the useful tool is the European Union Official website PRADO (free resource) helping recruiting managers to check `Right to Work` documents of a prospective employee.

We advise and help clients in being vigilant in this area and avoid illegal working penalties.

See this Map for the restaurants fined in London this year.

 

Yes, as directors are classified as employees of the business (Notice 700/65 para 2.3) you can recover VAT on lunch.

But as always there a few pot holes down this road to be aware of:

• Subsistence – A meal taken away from normal place of work on a business trip is allowable.
  (Notice 700 para 12.1.2)

As a guideline, a claim should not be a problem if the business meeting is at least five miles away from the main trading base.

So a meal ordered to your office for lunch is not allowable.

• Business Purpose – You cannot recover the VAT on meals which are not taken for business purposes (Notice 700 para 12.1.2)

Unfortunately, keeping the director’s tummy full is not a business purpose.

 

• Exclusive – If the entertainment is provided only for directors or partners of a business the VAT incurred is not input tax. This is because the goods or services are not used for a business purpose. The VAT cannot, therefore, be recovered (Notice 700/65 para 3.2)

Thus, if meal is ordered for director only and not for other staff as well, Input VAT cannot be claimed.

Conversely, VAT can be claimed for employee entertainment like Christmas party when all employees including directors can attend it. Also there is no monetary cap on it.

See also Neil Warren article mentioned below on a planning tip – a small charge for guests.

 

Thus in conclusion, it’s better to avoid claiming Input VAT on meals for directors, unless it can satisfy the above conditions, which in our opinion is a high threshold to cross.

 

Sources:

• Whole of VAT notice 700/65 ; and
• Para 12 of VAT notice 700
• Neil Warren’s article on ICAEW

 

Things needed:

1. PAYE reference number i.e. first need to register as an employer with HMRC.
2. Staging date: date when first member of staff starts work.

 

Next:

3. Choose a pension scheme
4. Write to staff: use pension regulator’s draft letters.  See note 1 below
5. Declare compliance to pension regulator.

 

Note:

1. Currently we use Moneysoft payroll manager and send Postponement letter to all staff.

2. Tax relief on pension: Relief at source or net pay

3. Employee often ask – How do i transfer my old pension to the new employer?

3. Please use pension regulator’s website for more information. http://www.thepensionsregulator.gov.uk