RCB/8/18 VAT—liability of bicarbonate of soda
Revenue & Customs Brief, Issue 8. 13 July 2018
1 Purpose of this Brief
This brief sets out HMRC's position following the decision of the First-tier Tribunal in Phoenix Foods Ltd (“Phoenix”). The issue in this case was whether bicarbonate of soda sold in small tubs to supermarkets qualified as zero-rated food or was subject to the standard rate of VAT.
Businesses that manufacture or sell bicarbonate of soda.
Phoenix supplied small 200g tubs (and 25g sachets) of food grade bicarbonate of soda to supermarkets. The labelling on the tubs referred to its use as a leavening agent in baking and also to its non-culinary uses such as a cleaner, deodoriser and mild abrasive.
HMRC argued that bicarbonate of soda should be standard-rated as it is a product with multiple uses, and that it was only added to food for 'technological purposes' as a leavening agent, not for its nutritional value.
Phoenix argued that the product should be zero-rated as the:
— marketing of the product indicated that it was a food ingredient
— product contained sodium