In WM Morrison Supermarkets v HMRC, the first tier tribunal (FTT) found that rotisserie chickens were a supply in the course of catering and therefore subject to VAT at 20%.

VAT legislation zero-rates supplies of food, but supplies of catering are excluded from the zero-rating.  ‘Catering’ includes supplies of hot takeaway food but not cold. ‘Hot takeaway food’ is also defined and includes any food that is kept hot after it has been heated, be it on hot plates, under heat lamps or in packaging that retains heat. This is why it is possible to buy a VAT-free hot pie or pasty; if they are neither cooked to order nor kept warm, they can be zero-rated straight out of the oven!

Any takeaway food that is advertised or marketed in a way that indicates that it is supplied hot will also be subject to VAT at 20%.

Morrisons appealed to the FTT against VAT assessments totaling £17,034,932. They argued that their rotisserie chickens were cold takeaway food and were therefore zero-rated. HMRC argued that the chickens met several of the conditions for standard-rating.

The FTT found that the chickens were not advertised or marketed as hot food but they were kept in packaging that retained heat. Morrisons claimed that the plastic-lined chicken bags were merely designed to contain chicken juice, but it was found that in the packaging a tightly-wrapped chicken would cool by 47.06% after 2 hours, compared with a 62.59% temperature drop for an unwrapped chicken over the same time period.

The chickens were therefore hot takeaway food and a standard-rated supply of catering.

This case demonstrates the complexities involved in establishing the VAT rating of some supplies. If you have any questions about charging VAT on your goods or services please get in touch with us.