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Innocent Ltd v HMRC

In Innocent Ltd v HMRC (TC00771 – 18 November) a company marketed liquid products made from various crushed or squeezed fruits which it described as ‘smoothies’. The products had a water content of 84%. Initially it accounted for VAT on these sales but it subsequently submitted a repayment claim on the basis that it should have treated them as zero-rated. HMRC rejected the claim on the basis that the products were ‘beverages’ and excluded from zero-rating by VATA 1994 Sch 8 Group 1 Excepted Item 4. The tribunal upheld Customs’ ruling and dismissed the company’s appeal finding that the products had ‘the consistency of a moderately thin soup’ but were intended ‘to be drunk from the bottle’. Since they were intended and sold as drinks the products were within the definition of ‘beverages’.

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