VAT on food

thriftychick

I was just looking at my bill from Lidl and each item is marked as either A or B. A -without VAT and B - with VAT @ 17.5%. I was surprised to see that apple and orange juice has VAT added on. I hadn't realised that some food products attracted VAT. Does anyone know what other, what I would call basics, also include VAT?

soappie

I think you'll find most food products that have been processed in some way, such as cakes, orange juice etc. will attract VAT and non-processed foodstuffs won't.

The definitive list and explanation is here:

HMRC Food and VAT

zippychick

Hi Thriftychick:hello:

I've moved your thread to the Shopping and groceries board

Martin’s asked me to post this in these circumstances: I’ve asked Board Guides to move threads if they’ll receive a better response elsewhere(please see this rule) so this post/thread has been moved to another board, where it should get more replies. If you have any questions about this policy please email [EMAIL="abuse@moneysavingexpert.com"]abuse@moneysavingexpert.com[/EMAIL].

thanks:)
Zip

DCFC79

There was a case recently where there was a disagreement about a biscuit that hmrc said was a cake but the manf said it was a cake or vice versa

satan666wayne

DCFC79 wrote: »

There was a case recently where there was a disagreement about a biscuit that hmrc said was a cake but the manf said it was a cake or vice versa

Jaffa.......

geordie_joe

DCFC79 wrote: »

There was a case recently where there was a disagreement about a biscuit that hmrc said was a cake but the manf said it was a cake or vice versa

Jaffacakes. The VAT man said they were chocolate biscuits, so VAT had to be charged on them. Mr McV said they were cakes and no VAT was chargeable on them.

Mr McV won.

calleyw

Also M & S won a case on tea cakes.

And tax man was going to have pay £3.5 million back to them. They had wrongly been taxed as biscuits.


Yours

Calley

JasonLVC

The 'Jaffa Cake' Case is donkey's years old, we've moved on since then to :-

Whether a Pringle has enough potato product in it to qualify as a potato crisp (and thus VATable). Yes, although mostly potato starch and floor sweepings, Pringles are still a potato for VAT purposes.

Whether a rice based snack-a jack-can be zero rated as a rice based product. No, becuase the rice 'swells' under water pressure during the moulding process, it is a VATable item.

Whether a teacake is a biscuit or a cake. M&S won a few million last year when it was proved to be a zero rated item, not a VATable one. No refund to the customers who bought them and paid VAT on them though

LoveJuice lost last year a case involving orange/fresh fruit juices. They have stall inside shopping centres, you select your fruit and they turn it into a drink for you. Fruit = zero rated, but once you squeeze the fruit the juice you get is a beverage and beverages are VATable.

geordie_joe

JasonLVC wrote: »

Whether a teacake is a biscuit or a cake. M&S won a few million last year when it was proved to be a zero rated item, not a VATable one. No refund to the customers who bought them and paid VAT on them though

Are you sure? The EU court ruled that the VAT should be repaid (3.5 million) in principle, but left it to the UK courts to sort out/enforce. The VAT office did pay £88,500 to M&S,but that was compensation for the cost to M&S of collecting the VAT and passing it on to them. They refused to pay the actual £3.5 million VAT refund as M&S had not paid it, the customers had.

I do know the house of lords was going to decide whether the refund had to be given to M&S, but can't find anything to say what they decided.

I would like to know, one way or the other, as I believe the money should not go to M&S, but also should not be kept by the VAT office. Obviously, it would be impossible to give it back to the customers who paid it in the first place, but a charitable donation would be a good compromise.

JasonLVC

http://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article5663183.ece

and the summary notes from the Lords (if you don't trust the Daily Mail;)) :-

http://www.publications.parliament.uk/pa/ld200809/ldjudgmt/jd090203/marks.htm

It went all the way to the ECJ who concluded that it was unfair that M&S could keep the £4m but they also said that HMRC couldn't keep it either and told the UK to 'sort it out'!. It went back to the HoL who decided that HMRC couldn't have it and so M&S got it all back be default.

It was a victory over HMRC but a hollow one for the consumer (hence my little sad face icon in the post). HMRC call this kind of refund 'unjust enrichment' and they've used it to stop ££££ of refunds to taxpayers but following the M&S case, its opened the floodgates for big refunds to go straight to the bottom line of the business. Rank plc won this year about £35m relating to fruit machines and VAT. Straight on the bottom line!.