Fast-food restaurants in the UK have been informed that the taxman could soon be cooking up a VAT Investigation storm in their kitchen…

An article in The Independent, on Thursday 5 January 2012, states that HM Revenue and Customs (HMRC) “has found a tasty new target” – the fast-food industry.


Her Majesty’s Revenue believes that fast-food branches have been avoiding value-added-tax (VAT) payments through both innocent administrative errors and conscious actions of their own.


The Independent reports that in the past 6 months 85 restaurants have been raided by tax officials and that all fast-food joints visited by the taxman had made some form of error with their taxes.


£9m of undeclared taxes have been claimed to have been discovered during HMRC’s 85 fast-food restaurant raids and it is predicted that there are millions more of undeclared taxes to be found in the UK’s fast-food industry.


It is said to be common for fast-food restaurants to overestimate the percentage of food sales that are free ofVAT, including cold food or food that is taken away from the restaurant.


The only food that is liable for VAT in a fast-food restaurant is hot food that is eaten in the restaurant, which is liable for 20% VAT.


The fast-food restaurants already targeted by HMRC have been based in London, but it is expected that HMRC will spread their fast-food VAT crackdown up and down the rest of the UK.


Although not being made public knowledge it is thought that as well as small chains and family owned fast-food joints, that big brands and multi-chained restaurants have also found themselves in hot water.


The compliance official heading HMRC’s fast-food investigation, Sandra Wake, said:


“There is a serious problem with some fast-food outlets deliberately falsifying their records to evade tax. We will come down hard on those who have chosen to break the rules.”


One of the worst fast-food offenders discovered by HMRC falsely claimed that 80% of their sales were VAT free, when in fact only 5% of their sales were legitimately VAT free.


HMRC have said that a vast majority of fast-food restaurants have been placing the blame on wrongly programmed tills and that outlets guilty of criminal acts will be pursued by the Revenue.


The increase to 20% VAT was implemented at the start of 2011, before that hot fast-food served at restaurants was liable for 17.5% VAT.


Kevin Kinsella Jnr, of KinsellaTax, said:


“Deary me, it may be some of the fast-food restaurants will go out of business. Is that good or bad? Any veggie will probably welcome it. But fast-food restaurants please join the queue. Who next? Fishing maggot shops?!”


Are you a fast-food restaurant owner?



Have HMRC made an enquiry into your VAT payments and tax affairs?


If so we can help!


KinsellaTax staff consists of ex-HM Inspector of Taxes and ex-HM Custom and Excise Officers, fully experienced inHMRC investigations.


Call KinsellaTax now on 0800 471 4546 and speak with A VAT investigation expert today, alternatively you can fill in a KinsellaTax enquiry form.


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