James Lowman ACS

ACS chief executive James Lowman

The Association of Convenience Stores (ACS) has welcomed the inclusion of certain food and drink sales in the reduced rate of VAT announced by the Chancellor in his summer statement on Wednesday, and confirmation that convenience stores can go through the same process as other businesses to get licences for seating outside their store.

ACS chief executive James Lowman said: “We are pleased that the Treasury and the Ministry of Housing, Communities and Local Government 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.”

During his statement, Chancellor Rishi Sunak announced that the rate of VAT would be cut from 20% to 5% on eat-in or hot takeaway food, mentioning cafes, pubs and other hospitality businesses as those that would benefit. The Treasury has now confirmed that if any vendor provides food and drink for consumption on the premises, or hot takeaway food or drinks, then those supplies are eligible for the reduced rate. Cold takeaway food and drinks are not included in the reduced rate. The reduced VAT rate will apply from 15 July to 12 January 2021.

The Ministry of Housing, Communities and Local Government (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.