HMRC have published Revenue & Customs Brief 8 (2018): VAT – liability of bicarbonate of soda, inviting taxpayers to make VAT reclaims if they have treated the supply as standard rated when it could have been zero-rated.
The recent case of Phoenix Foods Limited v HMRC [2018] TC06296, found that bicarbonate of soda had numerous uses, and could be zero-rated or standard rated (if for cleaning).
The First-Tier Tribunal decided that how the product is packaged and where it is placed by supermarkets (for example) will determine whether it should be treated as Food for human consumption (zero-rated) or cleaning products (standard rated).
Following the decision HMRC have published a new Brief. It states that HMRC will consider a number of factors when determining what rate should apply.
HMRC have invited taxpayers to make a claim in writing if they believe they should have treated the supply as zero-rated but have treated it as standard rated.
The usual four-year time limit will apply and, where necessary, HMRC indicate they will consider whether there will be Unjust enrichment as a result of the claim.
Links
Reclaims and unjust enrichment
External link:
Revenue and Customs Brief 8 (2018): VAT – liability of bicarbonate of soda
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