Fast food outlets in line for VAT refund

Sandwich and fast-food outlets could claim back four years' worth of tax charged on food eaten in their restaurants after an EU ruling.

Outlet managers are encouraged to make their requests as soon as possible as claims are capped at four years.

The European Court of Justice has ruled that where the level of service is low, retailers are not required to pay VAT.

The ruling was announced after it was decided that a German fast food operator did not have to charge the full VAT rate for food customers ate while sitting on chairs by his van.

Thousands of businesses could benefit from this judgement but to qualify, the transaction should be about food, rather than service.

However, this position is expected to be challenged in the courts. A Revenue spokesman said: "The supply of all food eaten on the premises is a service issue and so remains standard rated for VAT."

Leisure giant Whitbread, which owns the Costa coffee chain, said: "It is something we are aware of. We are going to monitor what happens and act accordingly."

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By Gemma Rowbotham

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