Convenience stores to benefit from VAT cut and pavement licensing

ACS (the Association of Convenience Stores) has welcomed the inclusion of certain food and drink sales in the VAT cuts announced by the Chancellor of the Exchequer yesterday.

In his summer statement in Parliament, Rishi Sunak confirmed that the rate of VAT will be reduced from 20% to 5% in a bid to get the UK’s economy moving following lockdown.

Eat-in or hot takeaway eateries, such as cafes, pubs and other hospitality businesses would benefit from 15 July to 12 January 2021.

Cold takeaway food and drinks are not included in the reduced rate.

The Treasury have now also confirmed that if any vendor that provides hot takeaway food or drink on site, then those supplies are eligible for the reduced rate.

C-stores who wish to have a licenced seating area outside their premises can go through the same process as other businesses to help boost sales.

ACS chief executive James Lowman said: “We are pleased that the Treasury and the Ministry of Housing, Communities and Local Government (MHCLG) have confirmed to us that convenience stores and other small shops will be able to benefit from the reduced rate of VAT on specific food and drink sales, and that our sector will be able to apply for pavement licences.

“Food service is a significant growth area in the convenience sector which will receive even more of a boost during the reduced VAT period, and with customers able to eat food at tables put outside the store.”

MHCLG will be publishing guidance on applying for pavement licences shortly.

Convenience stores will be able to apply, with a maximum seven-day application process and a maximum £100 fee, for a pavement licence along with other food businesses.

Figures from the 2019 Local Shop Report show that almost one in four convenience stores have some form of hot food counter or cabinet (23%) with around one in six (15%) currently providing either indoor or outdoor seating for customers.

The Treasury is expected to publish guidance on the VAT cut shortly. The full announcement from yesterday’s statement is available here.

The MHCLG have published draft guidance on Pavement licenses that can be read here.