R & C Brief 6 (2021): VAT liability of juice cleanse programmes

Revenue & Customs Brief 6 (2021): 'VAT liability of juice cleanse programmes’ clarifies HMRC's policy on the distinction between standard rated beverages and zero-rated meal replacement juices. 

• The general position is that the Supply of most food and some drinks are zero-rated for VAT purposes.
• Beverages, including fruit juices, are standard rated.
  • Most drinks are beverages, however, some drinkable liquids are not beverages and so are zero-rated.
• HMRC accepts that complete meal replacement products can be zero-rated, as they are not beverages. Such products:
  • Are often used as part of a diet or to promote weight gain.
  • Would provide the necessary calories and nutrients of a meal.
  • Are often legally regulated and may be given under medical supervision or on prescription.

In HMRC v The Core (Swindon) Limited [2020] UKUT 0301, the Upper Tribunal (UT) upheld the First Tier Tribunal decision that fruit and vegetable juices sold as a meal replacement were food and not beverages, therefore, were correctly zero-rated for VAT.

In making its decision, the UT noted that:

• In cases involving classifications for VAT purposes, there needs to be a multifactorial assessment.
• The way a product is marketed and sold is a potentially relevant factor in every case, but the weighting it is given may vary on a case by case basis.

This is consistent with HMRC’s approach. 

HMRC's approach: is a drink a beverage?

HMRC refer to Bioconcepts Ltd v HMRC [1993] VTD 11287, where it was found that a drink will be a beverage if it is commonly consumed and characteristically taken:

• To increase bodily liquid levels.
• To satisfy thirst.
• To fortify.
• To give pleasure.

HMRC indicate that in less straightforward cases, consideration may also be given to:

• How the drink is held out for sale.
• Circumstances of consumption (e.g. why and when is it consumed).
• Taste and texture.
• Ingredients.
• Manufacturing process.

Useful guides on this topic

Food: Catering and takeaway
What is the VAT rate charged on food? How does this differ depending on hot or cold food and food consumed on or off the supplier's premises? 

COVID-19: Reduced rate VAT
The temporary cut to the rate of VAT on food, accommodation and entry fees to attractions from 20% to 5%, introduced on 15 July 2020, is extended by Budget 2021 until 30 September 2021.

Appeals: VAT
The process of making a VAT appeal largely follows that of direct taxes, however, there are some differences.

Meal replacement juices are zero-rated food
In HMRC v The Core (Swindon) Limited [2020] UKUT 0301, the Upper Tribunal (UT) upheld the decision that fruit and vegetable juices sold as a meal replacement were food and not beverages, therefore, were correctly zero-rated for VAT.

External link

Revenue & Customs Brief 6 (2021): 'VAT liability of juice cleanse programmes’