Commentary

701/40/11 Food processing services

Part V8 HMRC Notices
Part V8 HMRC Notices | Commentary

701/40/11 Food processing services

Part V8 HMRC Notices | Commentary

701/40/11
Food processing services

November 2011

This notice cancels and replaces Notice 701/40 (January 2011)

1 Food processing services

1.1 What is this notice about?

With effect from 1 April 2008 the Agriculture and Horticulture Development Board (AHDB) was set up and as part of its role it undertakes the work previously carried out by the Meat and Livestock Commission. Sections 5 and 6 of this Notice have been updated to reflect that change.

1.2 What is this notice about?

This notice explains the VAT rules for food processing services, including abattoir services. Also included are details of the tax treatment of Agriculture and Horticulture Development Board levies relating to the meat industry. Further information on associated subjects can be found in Notice 701/14 “Food” and Notice 701/15 “Animals and animal food”.

Main narrative treatment—V3.112, V3.113, V4.201, V4.221.

1.3 General principles

The processing of someone else's goods is a supply of services, and if that process produces new zero-rated goods it is zero-rated.

New goods are produced when a process alters the essential characteristics of the goods. Where the process does not produce new goods, or the goods are not zero-rated, then the process is standard-rated. In these cases VAT is due on the charge for providing the processing service.

1.4 Are new goods produced?

The following may help you decide if new goods are produced—

  1.  

    —     size and shape;

  2.  

    —     appearance;

  3.  

    —     composition;

  4.  

    —     use; and

specifically for food items—

  1.  

    —     readiness to use or eat.

1.5 Examples of food processing services

The distinction between smoking different types of fish illustrates how the conditions are

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