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’.
Why it matters: Many readers will be aware of the products...
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