Robson-Kanu's zero-rated turmeric shots not consumed for pleasure

In Innate-Essence Limited (t/a The Turmeric Co) v HMRC [2022] TC08792, the First Tier Tribunal (FTT) agreed with the appellant that turmeric shots were a food item and not a beverage, allowing them to benefit from zero-rating.

• The appellant manufactures, produces and sells turmeric shots, trading as The Turmeric Co.
• The company is owned and run by Welsh International footballer Thomas 'Hal' Robson-Kanu and his father with about 15 employees making the homemade recipes for the following shots:
  • Raw Turmeric Original.
  • Raw Turmeric and Ginger.
  • Raw Turmeric and Beetroot. 
  • Raw Turmeric and Coconut. 
• The shots do not contain additional liquids, are not pasteurised so as not to affect the nutritional content, come in special packaging and require refrigeration due to the short shelf life.
• Items falling within Sch 8 VATA 1994 are classed as zero-rated unless excepted items, which are then standard-rated. Group 1 within Sch 8 is food.
• Beverages are excepted items and under case law, the word takes its ordinary meaning.
• The appellant had originally treated the supplies as standard-rated but then submitted an Error Correction for the VAT returns 06/2017 to 12/2019 inclusive, reclaiming the VAT paid, on the basis that the products were zero-rated.
• HMRC rejected the submission and the appellant Appealed the decision to the FTT.

The FTT adhered to the multi-factoral assessment as used in The Core (Swindon) Ltd v HMRC (2018) TC 06874 and upheld in the Upper Tribunal, to determine whether the shots were beverages or not:

• Was it a drinkable liquid commonly consumed? The parties agreed it was a drinkable liquid and the FTT held it was commonly consumed as there were no restrictions imposed upon it.
• Was it taken to increase bodily liquid levels? The 60ml shot size and oil and spice ingredients meant it would not be consumed for this purpose as better alternatives were available.
• Was it consumed to slake thirst? HMRC argued, as with the previous test, that as there were no maximum dosage and the consumption levels were subjective, these tests could be met. The FTT rejected this, as based on the recommended one to two shots per day, 60 - 120ml would be unlikely to slake a thirst.
• Is it consumed to fortify? The FTT upheld previous FTT findings that 'fortify' should be construed to mean an immediate, short-term boost. By the shots' very definition on its website, the benefits take months to be felt, so fail this test.
• Is it consumed to give pleasure? The members of the Tribunal were all given samples of the shots to try and it was agreed that they had a strong and unpleasant taste. The aim of the recipe was to make a natural product without a synthetic taste. There were no ingredients added to make it more pleasant. The FTT held that it was unlikely anyone would drink these for pleasure but for the health and well-being benefits instead.
• Would it be offered to an 'unexpected guest'? HMRC had already conceded that this test was not met in an earlier round of correspondence, and whilst HMRC was not bound by this view, the FTT agreed that it was correct.
• Was it marketed like other beverages? The appellant submitted that its subscription method of ordering meant it was unlike other beverages. That combined with the high price and strict storage requirements meant they were not competing in the same market.
• What is the reason for consumption? The appellant argued that the shots were more medicinal than ordinary beverages and the FTT agreed.
• What is the use to which it is put? Previous case law had used the 'lunchtime substitute' test, looking at whether the beverage could be used to replace something else clearly drank as a beverage, e.g. a beer. The FTT concluded the shots would not be a substitute for any type of beverage.

On this basis the appeal was upheld and the shots were confirmed as being zero-rated. HMRC is not seeking permission to appeal. 

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External link

Innate-Essence Limited (t/a The Turmeric Co) v HMRC [2022] TC08792