In Westland Horticulture Ltd v HMRC [2019] TC7283 the First tier tribunal decided a product to repair lawns could not be zero-rated as animal feed and should be standard rated.
Animal foodstuffs can be zero-rated for VAT:
- HMRC allows all grass seed to be zero-rated because of the difficulty in distinguishing seed for animal feed from that for lawns.
Westland Horticulture sells a product called Aftercut Patch Fix.
- It comprises grass seed, seed sowing granules, Clinoptilolite and water.
- The seed is a mixture of seeds of tough grasses, which makes up 92% of the contents.
- The granules are of organic matter. Clinoptilolite is a chemical that neutralises the effects of salts and ammonia, such as from pet urine.
- The product can be used wherever grass is required but is marketed for domestic lawns. It is sold in garden centres among grass seed. It is governed by regulations for grass seed.
- Westland applied zero rating to the product but on becoming aware that HMRC had made a ruling that a competitor’s similar product was standard-rated, they requested a liability ruling from HMRC.
- HMRC issued a liability decision; the seed was standard-rated and VAT was due of £588,882.
The tribunal dismissed the appeal finding that as the product was clearly held out for sale for lawns there was no difficulty in finding that it was not animal feed.
Links to our guides:
How to appeal an HMRC decision
External links:
Westland Horticulture Ltd v HMRC [2019] TC7283
VAT Notice 701/38 on seeds and plants: Grass seed is section 5.3.