Q&As

Are milk based drinks (50% or more) zero-rated for the purposes of value added tax, even if they are based on a dairy alternative?

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Published by a LexisNexis Tax expert

Published on: 17 April 2018

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This Q&A assumes that the drinks are not supplied in the course of catering.

The Value Added Tax Act 1994 (VATA 1994) governs the UK's value added tax (VAT) rules. For general information on VAT, see Practice Notes: What is VAT?, When does VAT apply? and When can a person recover VAT?

Zero-rated supplies

A zero-rated supply is treated as a taxable supply even though no VAT is charged on it. It is therefore different from a VAT-exempt supply. This has two main implications:

•
a zero-rated supply is taken into account in determining whether a business should (or is entitled to) be registered for VAT, see Practice Note: Who must and who can register for VAT in the UK?, and
•
input tax attributable to a zero-rated supply is recoverable from HMRC (whereas input tax incurred on an exempt

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Jurisdiction(s):

United Kingdom

Key definition:

ACT definition

What does ACT mean?

Association of Corporate Treasurers.

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