Food ― drinks and sports drinks

Produced by Tolley

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

  • Food ― drinks and sports drinks
  • Drinks and alcoholic drinks
  • How to decide if a product is a beverage?
  • Which alcoholic beverages are excluded from zero-rating?
  • Which other beverages are excluded from zero-rating?
  • Examples of products containing alcohol and other drinks
  • Practical points for businesses supplying drinks
  • Sports drinks
  • When are sports drinks excluded from zero-rating?
  • When is a product ‘advertised or marketed’ as a sports drink?
  • More...

Food ― drinks and sports drinks

This guidance note explores the exclusion from the zero-rating for food that applies to alcoholic and other drinks, sports drinks and certain products used in home-brewing.

For an overview of the scope of zero-rating for food in VATA 1994, Sch 8, Group 1, see the Food ― overview of zero-rating guidance note.

In-depth commentary on the legislation and case law surrounding the exclusion from zero-rating for these drinks and drink related products can be found in De Voil Indirect Tax Service V4.219.

Drinks and alcoholic drinks

There is an exclusion from zero-rating for alcoholic and other ‘beverages’ so such products will generally be standard-rated for VAT purposes. They may also be subject to the temporary reduced rate between 15 July 2020 and 31 March 2022. This temporary reduced rate is covered in the Hospitality industry ― temporary reduced rate from 15 July 2020 to 31 March 2022 guidance note.

How to decide if a product is a beverage?

The legislation which provides the basis for the exclusion of certain alcoholic and other drinks from zero-rating uses the word ‘beverage’. This term is not defined in the legislation itself. Sometimes it can be a challenge to decide whether a product is a ‘beverage’ or something else (for example drinkable food / meal replacement products).

When considering what a beverage is for VAT, HMRC generally takes an approach which was seen in the Tribunal case of Bioconcepts. This approach (or test) suggests that a beverage is a drinkable liquid which is commonly consumed and which fulfils one or more of the following:

  1. it is characteristically taken to increase bodily liquid levels

  2. it is taken to slake the thirst

  3. it is consumed to fortify

  4. it is consumed to give pleasure

Bioconcepts Ltd v C & E Comrs [1993] VAT Decision 11287; VFOOD7520

It is worth noting that there has been a significant amount of case law in this area and courts have not always followed this Bioconcepts test. This is

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