Firm closing

[John Wright]

1 minute ago, Gladys said:

Possibly because the VAT paid cannot be reclaimed because they are not registered?  

But, fuel bills apart, they would have few VAT inputs, no VAT on wages, no VAT on food raw ingredients purchased.

There may be VAT on rent. Will depend if landlord has elected  to be registered

[GreyWolf]

Sugarloaf was one of the islands better cafes, they seem to have spent a fortune on upgrading it but they seemed to be shut more often than open since acquiring it from the previous owner ( patchwork) also the big venture across the road will take a lot of customers when that’s finished. With the Indian shut a long time now also Andreas pizza moving of island and  sugarloaf closing, Ghost town by the Specials comes to mind thinking about PSM.

 

[Banker]

11 minutes ago, GreyWolf said:

Sugarloaf was one of the islands better cafes, they seem to have spent a fortune on upgrading it but they seemed to be shut more often than open since acquiring it from the previous owner ( patchwork) also the big venture across the road will take a lot of customers when that’s finished. With the Indian shut a long time now also Andreas pizza moving of island and  sugarloaf closing, Ghost town by the Specials comes to mind thinking about PSM.

 

As you say an lot of money spent on refurbishing whole building & kitchen etc but hardly ever open which is why it seemed more of a hobby than full time work 

[The Voice of Reason]

1 hour ago, Roxanne said:

The Patchwork used to be one of my favourite places to eat back in the days when I ate that kind of food. Always busy, friendly staff, chef who cares about his food. It’s a sad loss for the south no matter the circumstances.  

Many moons ago I remember going there for Sunday afternoon tea and a showing of a film “Casablanca” IIRC. They covered up the windows to shut out the light.

It was nice

[Passing Time]

2 hours ago, John Wright said:

But, fuel bills apart, they would have few VAT inputs, no VAT on wages, no VAT on food raw ingredients purchased.

There may be VAT on rent. Will depend if landlord has elected  to be registered

There is however VAT on the prepared food which for most eateries is the killer

[The Phantom]

MexiMann has gotten itself into a pickle with VAT too. 

One of the few places that was open over lockdown and they were so busy that it took them over the threshold, but they didn't realise.  Now they've been stung with a big retrospective VAT bill and they've got a VAT donation bucket.  I threw the change from my Quesidilla in there, it happens more often than you'd think with small businesses. 

Edited March 27, 2023 by The Phantom

[John Wright]

37 minutes ago, Passing Time said:

There is however VAT on the prepared food which for most eateries is the killer

For Sugarloaf, the USP of which was homemade, that shouldn’t have been an issue.

[Passing Time]

14 minutes ago, John Wright said:

For Sugarloaf, the USP of which was homemade, that shouldn’t have been an issue.

To be honest, I haven't eaten there. Not that I didn't want to, they were always busy when we were down south. if they didn't do a lot of cooked food then yes and an awful lot of coffee would need to be sold to make an impact

[Banker]

Here’s his post 

[b4mbi]

Sugarloaf was only open 2 days a week, and then for not many hours, and not at all that I've seen this year.

How do you build up a loyal/regular customer base? 

In my opinion, it wasn't run with the intention of trying to make a living out of it, more as a hobby, when they could be bothered.

The VAT threshold is £85,000 and VAT Notice 709/1 deals with catering/take away food, it's applicable here too.

In general, if you're VAT registered, food /drink consumed on the premises is always subject to standard VAT (20%), only cold takeaway food not.

 

 

[Gladys]

1 hour ago, Passing Time said:

There is however VAT on the prepared food which for most eateries is the killer

Which prepared food, the food they buy in or sell?  If they aren't registered for VAT they cannot charge it on the food they sell, nor recover it if charged on anything they buy. 

[John Wright]

15 minutes ago, Gladys said:

Which prepared food, the food they buy in or sell?  If they aren't registered for VAT they cannot charge it on the food they sell, nor recover it if charged on anything they buy. 

That’s the point. Given they prepare most of their produce from scratch they have virtually no VAT inputs. If turnover exceeds £85,000 they’ve got to add 20% VAT on their prices. That’s a huge price increase.

Obviously if you buy in your food for resale you can claim back your input tax ( the VAT on the cakes, pies, etc, that you buy ) but if you make everything from scratch you don’t pay VAT on most of your ingredients.

So for a business like Sugarloaf turnover going above £85,000, due to price rises to cover increased overheads, registering for VAT is a double whammy. You either have to up prices by 20% or take a net 16.67% revenue fall.

[Ativa]

2 hours ago, The Voice of Reason said:

Many moons ago I remember going there for Sunday afternoon tea and a showing of a film “Casablanca” IIRC. They covered up the windows to shut out the light.

It was nice

If they were paying the proper legal license to be able to have a public showing, then there is no way something like that would have cleared a profit.

Chances are they weren’t.  Either way it shows a lack of business sense to either run without making cash or put on an event that could lead to a significant fine.

[WTF]

so why don't these food outlet owners set up numerous companies on paper to deal with things so no individual company ever exceeds 85k ?

[Andy Onchan]

13 minutes ago, John Wright said:

That’s the point. Given they prepare most of their produce from scratch they have virtually no VAT inputs. If turnover exceeds £85,000 they’ve got to add 20% VAT on their prices. That’s a huge price increase.

Obviously if you buy in your food for resale you can claim back your input tax ( the VAT on the cakes, pies, etc, that you buy ) but if you make everything from scratch you don’t pay VAT on most of your ingredients.

So for a business like Sugarloaf turnover going above £85,000, due to price rises to cover increased overheads, registering for VAT is a double whammy. You either have to up prices by 20% or take a net 16.67% revenue fall.

I've always said VAT is an iniquitous and inequitable tax.