Successful VAT Appeal Against HMRC Case Study

Using The VAT People’s guidance, a business won a VAT tribunal appeal against HMRC involving the VAT treatment on the supply of a health food product. The appeal related to zero-rating of the company’s products, which were vegan protein powders used for sports recovery, sold in health food stores and directly to customers via their website.

The company successfully argued that the sale of the products qualified for zero rating for VAT purposes, rather than standard rated, which would have affected the profitability of the products.

The VAT Tribunal applied a two-part test to determine if the products fall under the VAT exception for sports drinks:

• Was the product a sports drink?;
• Was it marketed and promoted as enhancing performance, aiding the recovery of building bulk?

The Tribunal held that the products did not meet the criteria and was therefore zero-rated, for VAT purposes. This ruling sets a precedent for how HMRC determines the VAT treatment of food and drink products.   

We recommend that you contact our free helpline on 0161 477 6600 or email us at enquiries@thevatpeople.com to discuss the VAT liability of your supplies to establish that it is accounted for VAT correctly.