Innocent VAT campaign in the balance

Innocent smoothies

A campaign to have fruit smoothies zero-rated for VAT on the basis they are food rather than a beverage could be a lost cause because of litigation two years ago that failed to establish the same point.

High profile smoothie maker Innocent has employed PwC to help lobby the government to zero rate products in the smoothie market.

But observers say this argument failed in the 2007 Kalron Foods High Court decision which ruled smoothies constitute a drink and should therefore be subject to the standard rate.

Marc Welby, VAT partner at BDO Stoy Hayward, said it will be very difficult for Innocent to establish a plausible case why the smoothies should be zero rated.

‘Even in the local Waitrose its right next to the fruit juices which are standard [VAT] rated…they haven’t helped themselves so far as the historical positioning,’ he said.

According to Lorraine Parkin, a VAT partner at Grant Thornton, despite most VAT case studies having already been litigated, there are still ‘a lot of grey areas, especially in basic and non-basic foods.’