Collagen-based drink was a beauty product

The taxpayer sells a product called Skinade which is described on its website as a ‘uniquely formulated drink’ that uses ‘high quality ingredients for your skin’. It recommends that it should be used as ‘part of your daily skincare regime’.

In November 2020 the taxpayer submitted an error correction form to HMRC to reclaim overpaid output tax of £1.25m in the previous four years on the basis that Skinade qualified as a zero-rated food. HMRC rejected the claim on the basis that it was a beauty product rather than a drink highlighted by the fact that it was sold in beauty salons and cosmetic clinics rather than to food suppliers.

The taxpayer appealed.

The company chief executive officer referred to the nutritional ingredients of the drink including fresh collagen protein organic flaxseed oil vitamins B and C as well as natural grape juice. He...