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Duncan & Toplis is here to help and support you through the ongoing challenges presented by the coronavirus pandemic. Whilst this is an anxious time for many, it’s important to know that there is help available.

We are summarising the measures, including eligibility requirements, as they are announced and all details can be found here in our COVID-19 Knowledgebase.

Eat Out to Help Out Scheme

Eat out to help out scheme

In order to encourage consumers to visit restaurants and other eating establishments which have struggled as a result of the coronavirus pandemic, the government has introduced the Eat Out to Help Out Scheme.

This scheme incentivises customers to dine out by giving them a 50% discount on food and non-alcoholic drinks, which the establishment can then claim back from the government.

The 50% discount is capped at £10 per person and will apply only on Mondays, Tuesdays and Wednesdays throughout August 2020.

Eligible establishments

The establishments that are eligible for the scheme are those which sell food for immediate consumption on-premises. This could include but is not limited to:

  • restaurants;
  • cafés;
  • public houses that serve food;
  • hotel restaurants;
  • restaurants and cafes within tourist attractions, holiday sites and leisure facilities;
  • dining rooms within members’ clubs; and
  • workplace and school canteens.

Eligible sales

The 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). There is no minimum spend requirement. It’s important to note that the discount cannot be applied to:

  • alcoholic drinks;
  • tobacco products;
  • food or drink that is to be consumed off premises; and
  • food or drink that is sold as part of a private party, event or function taking place within an eligible establishment.

However, if a customer is dining in and then takes away the remainder of their meal, the discount will still apply. If you include a service charge on your bill then this is not included in the scheme discount.

Tax impact

You will still need to pay VAT based on the full amount of your customers’ bill. HM Revenue & Customs (HMRC) has confirmed that normal VAT rules will apply so that VAT is due on the price charged for the meal, not the amount paid. This means VAT would be due on the total amount of the final bill before the scheme discount is applied, regardless of how much the customer pays. 

The money received from the government through the scheme, will be outside the scope of VAT as the business will already have accounted for VAT on the full sales price of the meal at the point of sale. 

Likewise the full price of the meals will form part of the business income for other tax purposes. Businesses will need to make sure their accounting systems deal with this correctly.

How we can help you

Discounts often have a positive effect on businesses and with the government covering the cost, this could be very beneficial to the leisure and hospitality sector. However, as this scheme is unlike any other government support package so far, and given the uncertain economic environment, it’s effect can’t be entirely predicted.

Hopefully, the scheme will encourage more consumers to dine out, but it may also be the case that it will encourage those who would normally visit restaurants on Fridays and weekends to eat mid-week instead. This may require some flexibility in work schedules and other requirements and you should ensure that you are able to respond to any changes in consumer habits in order to capitalise on any increasing trade.

The scheme will also require some diligent accounting, particularly in the calculation of VAT as this scheme coincides with the temporary reduction of VAT to 5% for eligible businesses in the leisure and hospitality sector. Accounting for VAT in the scheme combined with VAT at 5% is something that some businesses have not experienced before and this may require a temporary change to accounting systems.

Frequently Asked QuestionsSales record templateGovernment Eat Out to Help Out promotional material

The information herein is intended for general guidance and does not constitute professional advice which takes account of individual specific circumstances, please get in touch if you require professional advice, guidance or assistance.


COVID-19, VAT, Leisure and tourism

Duncan & Toplis

Duncan & Toplis was established in 1925 and has 11 offices throughout the East Midlands: in Boston, Grantham, Lincoln, Loughborough, Louth, Melton Mowbray, Newark, Skegness, Sleaford, Spalding and Stamford. The group offers accountancy, tax and business advice, audit and assurance services, HR, Payroll, wealth management, IT services, legal and probate services and provides business turnaround support to SMEs.

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