Food - relevant case law regarding beverages

By Tolley
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The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Food - relevant case law regarding beverages
  • Zero-rated
  • Standard-rated

This guidance note provides an overview of the court decisions regarding whether a drink can be treated as a zero-rated food or a standard-rated beverage.

Zero-rated
Bio-light

A company manufactured a product named 'Bio-Light', which was an opaque brown fluid sold by chemists and health food shops. The product was packaged in small bottles, and was intended to be diluted with water before consumption. The company advertised the product as 'a natural detoxifying and slimming food supplement'.

HMRC issued a ruling that the product was standard-rated, on the basis that it was a 'manufactured beverage' and was excluded from zero-rating by what is now VATA 1994, Sch 8, Group 1, Excepted Item 4.

The company appealed, arguing that the product was a food supplement which should not be treated as a 'beverage', since it was designed to be sipped slowly at intervals, and would act as a violent laxative if drunk by the glassful.

The tribunal allowed the appeal, observing that the product had an unpleasant taste and would not 'be consumed for pleasure', and holding that it was not within the definition of 'beverage'. The tribunal chairman observed that a beverage was a liquid that was 'characteristically taken to increase bodily liquid levels, to slake the thirst, to fortify or to give pleasure'.

Bioconcepts Ltd, LON/92/2852 (VTD 11287) (subscription sensitive)
Wheatgrass juice

A company sold wheatgrass juice. HMRC issued a ruling that the product was a beverage and excluded from zero-rating by VATA 1994, Sch 8, Group 1, Excepted Item 4.

The company appealed, contending that wheatgrass juice was a zero-rated food. The tribunal accepted the company's argument and allowed the appeal, observing that the taste of the juice was 'quite unpleasant, and not the sort of thing that one might want to take in any great quantity'.

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