Innocent VAT campaign in the balance

Innocent smoothies

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.’

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