The Government's Eat Out to Help Out scheme is set to launch on the 3rd August and is giving 50% discounts up to £10 per person for when you eat in at restaurants. As a customer this can be used as many times as you like with restaurants signed up to the scheme!
The Scheme is a government plan to give a cash boost to the Hospitality industry and is expected to protect the 1.8 million people who work in restaurants, cafes and bars. The scheme only applies to food and soft drinks and does not extend to takeaways or alcohol.
Many businesses are taking advantage of the scheme and if you are not one of them, you are now potentially double the price of your competitors. The scheme is an incentive to get customers into your restaurant and the discount provided can be claimed back from the government so essentially you have nothing to lose out on! The scheme is set out to help attract customers during the quieter days of the week helping you build your business back up.
According to the government's website, the businesses that are eligible for the scheme are "establishments that are those in which food is sold for immediate on-premises consumption". This could include:
If you are not sure whether your business is included in the scheme, HMRC has provided guidance of specific examples of what is and isn't eligible.
The scheme is starting on the 3rd August and ending on 31st August, running on Mondays, Tuesdays and Wednesday. Throughout the month there will be no limitations for customers, they could potentially be using the scheme 2 or 3 times a day. When you have registered for the scheme, you can offer it throughout your opening hours on all eligible days that you are open on all qualifying sales of food and drink.
To be apart of the scheme you have to register on the HMRC website.
To register, you’ll need:
• The Government Gateway ID and password for your business (you create one when you register if you do not have one)
• The name and address of each establishment you’re registering unless you’re registering more than 25
• The UK bank account number and sort code for your business – BACS must be accepted
• The address on your bank account for the business (this is the address on your bank statements)
• The date your business started trading
You may also need:
• VAT number
• Employer PAYE scheme reference number
• Corporation Tax, Self Assessment or Partnership Self Assessment unique taxpayer reference
Once you have registered HMRC will check your registration carrying out Fraud and compliance checks for the scheme and when you make a claim.
An agent (such as us) will not be able to apply on your behalf however HMRC have said they have designed the claim process as easy as possible for business owners to apply themselves otherwise it would have delayed releasement of the scheme if they allowed agents to have access.
If you have recently started and have submitted an application to the Local Authority to operate as a food business, as long as it was submitted on or before the 7th July 2020, you will be eligible for the scheme.
For the discount to be applied it must be purchased for immediate consumption on the premises and the discount can be applied to food/or non-alcoholic drinks. There is no minimum spend requirement.
The discount cannot be applied to the following:
• Alcoholic drinks
• Tabacco products
• Food or drink that is consumed off-premises
• Food or drink that is sold as part of a private party, event or function taking place within an eligible establishment
Offering the discount (calculation examples)
A group of four diners (2 adults and 2 children) spend £100, including £10 on alcoholic beverages. There is a 10% service charge bringing the pre-discount bill to £110.
Bill before service charge and discount £100.00
Service charge £10.00
Total bill £110.00
Amount spent on alcohol £10.00
Amount that discount can be applied to £90.00
Uncapped discount to customers (50% of 90) £45.00
Capped discount (£10 per diner) £40.00
Bill after discount is applied £70.00
The uncapped discount is £45, which is £11.25 per diner and is above the £10 per diner cap. The discount is therefore capped at £40.
A group of 4 diners have a bill of £50, which includes £8 on alcoholic drinks at your establishment. This means that the scheme only applies to £42 of the overall bill.
Bill before discount £50
Amount spent on alcohol £8
Amount that the discount can be applied to £42
Uncapped discount to customers (50% of 42) £21
Bill after discount is applied £29
The amount you can claim £21
The £10 per diner cap does not apply to this claim.
VAT will be due at 20% on the alcohol amount of £8, so applying the VAT fraction of 1/6 = £1.33.
VAT Will be due at 5% on the full undiscounted amount of £42 for the rest of the meal, so applying the VAT fraction of 1/21 = £2.
A group of 2 diners have a bill of £120, which includes £40 on alcoholic drinks at your establishment. Your establishment has its own 10% discount promotion on the entire bill (including alcohol), bringing the total to £108 (£72 on food and £36 on alcohol).
You must apply your discount before applying the Eat Out to Help Out discount.
Bill before discount(s) £120
Other discount (10% of 120) £12
Bill after your discount £108
Amount spent on alcohol £36
Amount that the discount can be applied to £72
Capped discount (£10 per diner) £20
Bill after discount is applied £88
The amount you can claim £20
VAT will be due at 20% on the alcohol amount of £36 (the amount after the restaurant’s own discount has been applied), so applying the VAT fraction of 1/6 = £6.
VAT will be due at 5% on the amount for the rest of the meal of £72, this amount includes the scheme discount, but not the restaurants own discount, so applying the VAT fraction of 1/21 = £3.43.
HMRC have confirmed that VAT will still be due on the full value of the bill before the discount has been applied. The logic behind this is presumably that whilst the customer is only paying part of the bill themselves, the restaurant is still receiving the full amount for the supply, in the way of the scheme.
The VAT should be paid in full within the correct period in which the transaction takes place, i.e. when the service is provided, and not when the refund for the scheme is paid. You will be allowed to make a manual adjustment to your records to reflect the VAT that is due if your point of sale system would not otherwise allow you to reflect the VAT due accurately. Alongside the scheme, you can continue to apply the temporary reduced rating for VAT on these catering supplies.
Remember that the temporary reduced rate doesn’t apply to sales of alcohol and neither does the Eat Out to Help Scheme.
To make a claim from the government, you will have to keep a record of your sales. This would include:
• Total number of people who have used the scheme in your establishment
• Total amount of discounts you have given
• Total value of the transactions under the scheme
To make a claim back for the other half of the cost, the system is set to launch to be available from 7th August. The government has said the following about the claim process:
• You must wait 7 days from registration before you make your first claim
• HMRC will pay eligible claims within 5 working days
• You will be able to submit claims on a weekly basis
• You will still need to pay VAT on the full amount of your customers' bills
• Any money you receive through the scheme will be treated as taxable income
• The service will close on 30 September
As the Eat Out to Help Out Scheme is only here for a month, it is good to start planning ahead. Having incentives for customers to go to your restaurant compared to one of your competitors and standing out from the crowd is massive right now. Considering some long term schemes might bring an extra revenue stream you have been looking for.
In the UK the most popular discount schemes are Tastecard or The Gourmet Society.
Tastecard says they are the UK's largest dining club boasting over 2.6 million members and claiming that 78% of their members-only eat at Tastecard restaurants. Their membership offers marketing strategies with results of increased new bookings and new customers as you have access to their consumer base and your share of their members dining spending. The joining fee as a restaurant with Tastecard is for free!
The Gourmet Society works similarly to Tastecard, offering 2 for 1 meals and 50% or 25% of the total bill. The membership is also for free, only charging individuals and companies for their services. The Gourmet Society offers to help fill your tables during your quieter periods at no extra charge, and say their method brings 84% of new customers by being a partner with them.
HMRC is helping the hospitality industry by providing extra support:
HMRC have released some promotional templates that could be useful. They will also be providing display stickers so people can see who is participating. Restaurants and establishments who have registered will be published on GOV.UK so the public can see who is taking part.
If you need any help with the scheme just let us know plus we can provide a helping hand. Our clients have already received advice and personalised promotional material for free during the current client, contact us today if you want to be apart of Saint Financial Group!
Are you going to be using the Eat Out to Help Out Scheme? Or have you got your own marketing strategy instead? We would love to know how you are overcoming this current climate.
This article was written for Saint Financial Group, a multidisciplinary group based in the UK that helps small businesses develop and grow. SaintFG offers a range of quality solutions in supporting businesses.
Saint provides the luxury of free business consultancy for of our clients, call now for your free consultation with a friendly business advisor to discuss your burning questions and put that energy back into your business!
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