Protein drink was not a sports drink

In February 2021 the taxpayer’s advisers submitted an error correction claim to HMRC for £1.246m – covering output tax overpaid on its Sunwarrior products for the four-year period to September 2020 – which was later reduced to £798 855.

HMRC rejected the claim for zero rating on the basis that the protein drinks were sports drinks.

Food or drink that is suitable for human consumption is usually zero rated by virtue of VATA 1994 Sch 8 Group 1. However the legislation includes many exceptions and one such exception is listed at item 4A: ‘Sports drinks that are advertised or marketed as products designed to enhance physical performance accelerate recovery after exercise or build bulk and other similar drinks.’

The First-tier Tribunal considered that if a product did not qualify as a ‘sports drink’ it was irrelevant to consider how it was advertised...