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How much VAT is due on a combined boat trip with meal?
A client organises boat trips in Norfolk. Customers can pay £60 for a four-hour boat ride including a two-course lunch or £40 for the boat ride only. When the boat is moored it serves as a restaurant where customers pay £30 for the lunch.
Our client has always treated the £60 payment as a mixed supply for VAT purposes and accounted for output tax on £20 namely the value of the standard-rated meal being £60 less the £40 cost of the boat ride only. But I wonder whether we could justify the £60 payment as a single zero-rated supply for the boat trip and the meal as incidental?
A recent visiting officer from HMRC is now saying that output tax should be declared on £30 a trip namely the cost of the meal charged when the boat is moored. He has said he will assess tax going...
