Key Facts
- •Innate-Essence Limited (t/a The Turmeric Co) appealed HMRC's denial of an error correction claim for £80,730.52 related to VAT on turmeric shots.
- •The appeal concerned whether turmeric shots are zero-rated as food (Group 1, Schedule 8 VATA) or standard-rated as beverages (excepted items, Schedule 8 VATA).
- •The turmeric shots are 60ml bottles of cold-pressed, unpasteurized liquid containing turmeric, ginger (in some varieties), beetroot (in some varieties), watermelon, lemon, pineapple juice, flax oil, and black pepper.
- •The shots are marketed for their health benefits, emphasizing the curcumin content and its purported long-term effects.
- •The shots have a strong, unusual taste and are not considered palatable by many.
Legal Principles
Supplies of goods or services are zero-rated if described in Schedule 8 of the Value Added Tax Act 1994 (VATA).
Section 30(2) VATA
Food, including drink, is zero-rated unless it falls under an excepted item in Schedule 8 (e.g., beverages).
Schedule 8 VATA, Note (1) to Group 1
The meaning of 'beverage' is not defined in legislation and should be given its ordinary English language meaning. Several key cases guide interpretation.
Various Case Law (Bioconcepts, Grove Fresh, Alpro, Unilever, Kalron, Ocean Grown, Innocent, The Core FTT, The Core UT)
Determining if a drinkable liquid is a beverage requires a multi-factorial assessment, considering the Bioconcepts test, the unexpected guest test, marketing, reasons for consumption, and the product's use.
The Core FTT and The Core UT, upholding a multi-factorial approach.
Outcomes
The appeal is allowed.
The Tribunal found that the turmeric shots are zero-rated as food, not standard-rated as beverages. This was based on a multi-factorial assessment considering the Bioconcepts test, the unexpected guest test, marketing, reasons for consumption, and use.