Catering in Extra care schemes
We are currently subsidising the catering costs in our extra care schemes - can anyone offer any suggestions as to how it can be made viable? We provide one 3-course meal per day (charged for in the service charge), but are open during the day, so that residents can choose if they wish to purchase breakfast and/or tea. This means that there are staffing costs etc, although only a few residents may opt to eat at these times.
If any of you subcontract the catering - are you charged VAT on the supply of food that is provided? The VAT legislation does not seem to be 100% clear, and one of our catering contractors charges VAT, whilst the other believes that it is not applicable.
Thanks for your help.
Hi Yvonne
I'm aware of an ECH scheme in Liverpool that allows the caterer providing the service to freely utilise the kitchen facilities as a commercial concern, and they run a catering / sandwich business alongside the ECH provision. This may allow you to withdraw subsidy and retain the service at current level?
Methodist HA also have a similar licensed trader arrangenment at their scheme in Wisbech, Cambs.
Have you tried offering a tray/sandwich option for evening meals which people can pre-book, so that you don't need to keep the restaurant open throughout. These can be collected by residents or care staff or delivered to flats for storage in fridge. I also think the outside catering option is a possibility - I believe Peabody Trust did some schemes in London with this model a few years ago.
I am a VAT consultant and have been specialising in the social housing sector for 19 years. The issue as to what charges are incurred on catering agreement depends on whether the catering contractor is acting as principal in the provision of catering or not. The treatment will depend on how the contract is worded. If the extra care facility provides the catering as principal, its purchases of food items will normally be zero-rated. However, if the contractor is providing the catering, any charges to the extra care facility for his services would normally be standard rated. I trust that helps.