A Juicy VAT Problem for HMRC

VAT rate on meal replacements
Posted 2021 by Jenny Bowden

A recent case relating to the VAT rate of meal replacements caught my eye. In the diet industry there is much debate over meal replacement drinks and just as much it appears within HMRC for a case that went to Upper Tribunal.

The case involved a juice bar which offers juice cleanse programmes comprising fresh drinks made by juicing raw fruits and vegetables and whether the sale of these juice cleanse drinks were standard rated beverages or zero-rated meal replacements.

In order to determine whether a product is a beverage or a food one must consider a variety of factors, from how and why the product is consumed, the ingredients, how they are manufactured and how they are advertised to assess the applicable VAT rate.

In this case, the juice drinks were found by the Upper Appeal Tribunal to be meal replacements and were zero rated.

So if you are in this business, how you market it could be crucial factor in determining the VAT position.

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