Blog Search

Archives

FTT examines juicy VAT case

The First Tier Tribunal (FTT) were recently called upon to examine whether fruit and vegetable juices sold as meal replacements were beverages and therefore standard-rated for VAT.

The case (The Core (Swindon) Ltd [2019] TC 06874) concerned a juice bar and health café which supplied juice cleanse programmes (JCPs) consisting of fresh drinkable products made from juicing raw fruits and vegetables. Customers would participate in a programme over multiple days, for example a 5-day programme might be taken where meals were replaced by JCP juices and smoothies for five days with four servings per day. The marketing material showed that the JCPs were marketed as meal replacement programmes and not merely as healthy drinks.

In HMRC’s opinion, standard-rating applied for VAT purposes, but The Core argued that what was important was what the consumer actually sees, which was more than just some drinks. They were marketed and sold totally differently. In addition, customers were provided with advice and encouragement, as well as the menu plan.

The FTT was called upon to decide whether the JCP product was a beverage within excepted item 4 of VATA 1994, Sch 8, Grp 1, and in doing so, it needed to make a multi-factorial assessment looking at:

– how the product was marketed;
– why it was consumed by the customer; and
– what was the use to which it was put?

Overall, the key difference in this case compared to other cases cited at the Tribunal was that the product was specifically sold by The Core, and bought by its customers, as a meal replacement, and not as a beverage. Moreover, the JCPs were not marketed as beverages, but as meal replacements in liquid form. Although the JCPs appeared to be a kind of ‘smoothie’, they had a different function and so were regarded as a food.

The Tribunal was therefore able to allow the appeal and zero-rating applied to the JCPs.

In summary, this case was particularly interesting as it demonstrated how the FTT needed to look at many layers of information before being able to make their determination of the facts.

  • Latest news and testimonials

  • Latest News

    • September Q&A

      Q. I have two small businesses which are treated as a group for VAT purposes, so we only submit a single VAT return covering both …

      Read more
    • Making Tax Digital for Business: update

      In July, the Government confirmed that the Summer Finance Bill would be published in September, with the measures dropped from the pre-election Finance Bill being reintroduced …

      Read more
  • Testimonials

    • Partner – Solicitor

      I have worked with SBL over the last 10 years on numerous matters involving owner-managed business. They are professional, personable, knowledgeable and work incredibly hard to provide the best advice to their clients. I would have no hesitation in recommending SBL.

      Read more
    • Director – Networking Company

      SBL are a professional Accountancy Firm and are exceptionally up to date with all legislations.  SBL know their clients extremely well and what will work best for their business. SBL understands business and how business works and they deliver the very best considered professional advice.

      Read more
    • Director – Retail/Fashion Company

      SBL have provided auditing and other accounting services for our company for more than 10 years. They not only offered excellent support from a professional accountant company, but also delivered forward-thinking advice on how to improve our business.