Zero or standard-rated meal replacement products

The taxpayer offered juice cleanse programmes consisting of fresh drinkable products made from juicing raw fruit and vegetables. The programmes run over several days over which time the consumer replaces meals with the juices and smoothies. The marketing material described the programmes as meal replacements not just healthy drinks.

It claimed the products were zero rated under VATA 1994 Sch 8 group 1. HMRC said they should be standard rated under excepted item 4. The First-tier Tribunal accepted the taxpayer’s assertion that the products were not beverages and allowed the appeal. HMRC appealed saying the tribunal had given too much weight to the way the products were marketed.

The Upper Tribunal said the lower tribunal had given ‘equal prominence’ to the way the products were marketed and how they were used. Indeed it found that they were ‘generally purchased as meal replacements’ not that they were just marketed...