Items benefiting from the relief: What is food?: Food and Medicine: Herbal Medicines
In all cultures, plants are traditionally accredited with real or imagined medicinal properties; and there has always been an overlap between medicinal teas and traditional herbal teas. For example, camomile tea, which is nowadays largely drunk for pleasure as an alternative to normal tea, is described in A Modern Herbal (by Mrs M Grieve) as tonic, stomachic, anodyne and antispasmodic.
There is a specific relief for herbal teas in item 4 of the items overriding the exceptions VFOOD0200). Nevertheless, there is often confusion as to how these preparations should be treated for VAT purposes.
The main point to remember is that the items overriding the exceptions relate to items which would otherwise fall within the exceptions. Therefore, to be zero-rated as a herbal tea, a product must first be food and then also be a beverage.
In the case of Dr Xu Hua (LON/95/2069), a practitioner of traditional Chinese herbal medicine, the tribunal found that the teas supplied on prescription were eligible for zero-rating even though they were for a medical or therapeutic purpose. They were made up of ingredients found in commercial brands of herbal teas, had some nutritive value and were drunk as part of a patient’s normal daily diet. That they were supplied for a medicinal purpose should not prevent the teas being treated with the same liability as the pre-packaged teas.
Following this decision, supplies of herbal teas, even when they are prescribed for a medical reason, have been accepted as zero-rated.
A consultation with a patient/customer is still standard-rated.
Supplies to practitioners of the individual ingredients of herbal remedies are not affected by this decision. The liability of individual herbs will vary depending on whether they are recognised generally as culinary herbs, such as parsley or ginger, and so zero-rated as food. More detail on the policy on herbs can be found in VFOOD9500.