This guidance in from the ACCA:

HMRC has released Revenue & Customs Brief 27/12 – VAT: Addressing borderline anomalies – guidance.

The brief covers announcements made during the Budget 2012 concerning changes to the VAT treatment of certain services:

hot food and premises


sports nutrition drinks

listed buildings

hairdressers’ chairs

self storage

anti-forestalling (relating to the listed buildings and self storage changes).

All of the changes will be effective from 1 October 2012 apart from the changes concerning caravans which will change from 6 April 2013. To supplement the information available on each change HMRC has issued seven new VAT Information sheets covering each issue.

Hot food and premises

Due to the uncertainty of the VAT liability of take away food there will be five tests introduced to help determine the VAT liability of hot food take away. Under the new rules sale of food if the food is hot at the time that it is provided to the consumer and satisfies one of five tests is standard rated:

test 1 – it has been heated for the purposes of enabling it to be consumed hot

test 2 – it has been heated to order

test 3 – it has been kept hot after being heated

test 4 – it is provided in a packaging that retains heat

test 5 – it is advertised or marketed in a way that indicates that it is supplied hot.

The other main aspect of the VAT change in regard to the definition of ‘premises’, as food sold for consumption on premises is standard rated irrespective of whether it is hot or cold. The definition of premises will be extended to include any area set aside for the consumption of food by the food retailer’s customers, whether or not the area may also be used by the customers of other food retailers.

See HMRC’s VAT Information sheet 12/12 for further details.


The sale of caravans is currently either standard rated if they are less than 7m in length and 2.55m in width or zero rated if larger then either of these dimensions.

From 6 April 2013 sale of caravans will be either:

standard rated if the caravans does not exceed 7m in length and 2.55m in width

reduced rate if the caravan is longer than 7m in length or 2.55m in width and is not manufactured to standard BS 3632:2005

zero rated if the caravan is longer than 7m in length or 2.55m in width and is manufactured to standard BS 3632:2005.

The same rules will apply to other types of supplies of caravans, eg leasing and deemed supplies. Removable contents such as white goods, carpets, curtains and furniture will continue to be a standard rated supply.

See HMRC’s VAT Information sheet 11/12 for further details.

Sports nutrition drinks

Most sports drinks are treated as beverages (designed to rehydrate, quench thirst or give pleasure) and therefore they are standard rated. In some cases as a result of court decisions some sports drinks were found not to be treated as beverages due to their high nutritional content. This has led to anomalies about the VAT treatment of sports drinks hence the change from 1 October 2012.

Sports drinks will be all be standard rated if they are advertised or marketed as products to enhance physical performance, accelerate recovery after exercise, or build bulk. This will include:






other products for the preparation of such drinks.

See HMRC’s VAT Information sheet 15/12 for further details.

Listed buildings

There is currently an anomaly between approved alterations of a protected building which is zero rated and their repair and maintenance which is standard rated. Not only has this been a point of contention between the taxpayer and HMRC leading to much confusion, there has always been an incentive to alter rather than repair a listed building.

The zero rating for approved alterations to listed buildings will be removed from 1 October 2012. There will be a transitional period where certain conditions are met operating until 30 September 2015, together with anti-forestalling provisions to prevent suppliers avoiding VAT.

See HMRC’s VAT Information sheet 10/12 for further details and further information on the transitional conditions.

Hairdressers’ chairs

Hairdressers’ chair rental is an often confusing and mis-interpreted area of VAT that has lead to businesses in the same industry applying different VAT rates. From 1 October 2012 renting out a chair in a hairdressers’ will be a standard rated supply, which in HMRC’s opinion has always been the case.

HMRC has regarded this as not a licence over land rather a provision of chair rental together with services relating to hairdressing, the scope of the legislation has been extended to include a fuller definition.

See HMRC’s VAT Information sheet 13/12 for further details.

Self storage

HMRC believes that there is an anomaly between the VAT treatment of storage supplied by self store providers and those supplied by traditional storage suppliers like removal companies. The changes will also address the unfair advantage some self storage suppliers have over other self storage suppliers due to some being exempt supplies and some standard rated. From 1 October 2012 the provision of space under for self storage of goods in structures such as:




will be a standard rated supply. There will be special provisions for supplies that straddle 1 October 2012 together with anti-forestalling provisions to prevent suppliers avoiding VAT.

See HMRC’s VAT Information sheet 14/12 for further details.


As mentioned in the approved alterations to listed buildings and the supply of self storage, details of the anti-forestalling provisions can found in HMRC’s VAT Information sheet 09/12.