HMRC has issued guidance on the Upper Tribunal decision in The Core (Swindon) Ltd [2020] UKUT 301 (TCC) where the Upper Tribunal upheld the FTT’s finding that supplies of ‘juice cleanse programmes’ were zero-rated meal replacements for VAT purposes and were not within the exception from zero-rating for ‘beverages’.
Revenue & Customs Brief 6/2021 sets out the basic principle that most drinks are standard-rated as ‘beverages’. HMRC accepts, however, that products designed specifically as complete meal replacements can be zero-rated and that this would include meal replacements in liquid form.
In The Core case the FTT had found that the juice cleanse programmes were generally purchased as meal replacements and not as beverages, and so were zero-rated. HMRC was concerned with the weight given by the FTT to the way in which the juice cleanse programmes were marketed as meal replacements, without testing the credibility of those claims.
Upholding the FTT’s decision, the Upper Tribunal held that in all cases involving classification for VAT purposes it is necessary to carry out a multifactorial assessment – in other words, to consider all the relevant facts in order to determine whether or not a drink is a beverage. Part of that assessment includes assessing the way in which a product is marketed, or how it is held out for sale, alongside the reasons why a customer would consume the product.
HMRC has decided not to appeal against the Upper Tribunal decision, given that the case was based on very specific facts.
HMRC has issued guidance on the Upper Tribunal decision in The Core (Swindon) Ltd [2020] UKUT 301 (TCC) where the Upper Tribunal upheld the FTT’s finding that supplies of ‘juice cleanse programmes’ were zero-rated meal replacements for VAT purposes and were not within the exception from zero-rating for ‘beverages’.
Revenue & Customs Brief 6/2021 sets out the basic principle that most drinks are standard-rated as ‘beverages’. HMRC accepts, however, that products designed specifically as complete meal replacements can be zero-rated and that this would include meal replacements in liquid form.
In The Core case the FTT had found that the juice cleanse programmes were generally purchased as meal replacements and not as beverages, and so were zero-rated. HMRC was concerned with the weight given by the FTT to the way in which the juice cleanse programmes were marketed as meal replacements, without testing the credibility of those claims.
Upholding the FTT’s decision, the Upper Tribunal held that in all cases involving classification for VAT purposes it is necessary to carry out a multifactorial assessment – in other words, to consider all the relevant facts in order to determine whether or not a drink is a beverage. Part of that assessment includes assessing the way in which a product is marketed, or how it is held out for sale, alongside the reasons why a customer would consume the product.
HMRC has decided not to appeal against the Upper Tribunal decision, given that the case was based on very specific facts.
