The HMRC has now issued detailed guidance on how the ‘Eat Out to Help Out’ scheme will operate, including the accounting treatment for VAT.
The ‘Eat Out to Help Out’ scheme was introduced at the beginning of August and will be place for the whole month, allowing diners to eat out for half price on Mondays, Tuesdays and Wednesdays. It is an attempt by the government to help support the restaurant and hospitality industries which have been hit hard by the coronavirus lockdown. The 50% discount can be applied to food and/or non-alcoholic drinks purchased for immediate consumption on premises, up to a maximum discount of £10 per diner (inclusive of VAT). This can include soft drinks and/or packaged snacks if they are bought for immediate consumption on the premises. There is no minimum spend requirement.
The guidance includes examples covering many different situations, such as meals purchased with or without alcohol and the interaction with the temporarily-reduced VAT rate of 5% for hospitality. Details of how the £10 cap applies and its interaction with other special offers from the serving establishment are also included.
It should be noted that VAT will always be due on the whole amount of the bill, including the subsidy received from the Government.
You can find more information, including how to register for the scheme, on the government’s website: https://www.gov.uk/government/publications/get-more-information-about-the-eat-out-to-help-out-scheme/get-more-information-about-the-eat-out-to-help-out-scheme.