What is food?: Specialised food products
Specialised food products which are recognised as normal and necessary food by a particular group of people are treated in the same way as other foods for VAT purposes. The main borderlines which produce difficulties are:
- whether the products are strictly food in the first place,
- whether they are confectionery and therefore standard-rated by excepted item 2, and
- whether they are beverages or products for the preparation of beverages, standard-rated by excepted item 4.
To come to a decision, you will need to examine how they are:
- held out for sale;
- described on their packaging;
- designed to be taken;
Sports and athletic foods
There is a wide range of products available for athletes and body builders. The apparent similarity of these products has meant that there has been some confusion about the VAT liability of some of them, which prompted a review of their VAT treatment in 1997. The aim of this review was to ensure a level playing field.
Drinks for athletes, body builders and similar
The introduction of excepted item 4A with effect from 1 October 2012 ensures consistent treatment of 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, including (in either case) syrups, concentrates, essences, powders, crystals or other products for the preparation of such drinks.
Prior to 1 October 2012 and the introduction of excepted item 4A it was considered that the primary use of these drinks was as a beverage, and so all were standard-rated unless they were a preparations of milk, egg or meat or were otherwise covered by the overriding items, and so were zero-rated.
These are standard-rated, with the exception of glucose, dextrose and Horlicks® tablets.
Specialised confectionery for athletes
Products intended to meet the specialist needs of athletes are not excluded from being considered as confectionery. The tribunal, in their decision in the case of E J Huczek (V.8850), stated: Having carefully considered the product we considered the Appellant’s arguments that the market was restricted to specialist consumers and that the price was so high compared to other confectionery items in bar form that only specific specialist sportsmen would purchase the bars. We conclude that these arguments are irrelevant. Whilst the Appellant’s marketing intentions are not challenged we cannot see any reason why sales should be so restricted and the product could easily be sold through chemist shops, health food shops and other outlets, even the traditional vendor of confectionery. The price cannot influence the nature of a product.
Whilst the tribunal in the case of Science in Sport (V.17116) decided that a sports bar was zero-rated, this was on the basis that they found that it was not an item of sweetened prepared food and not confectionery on that basis.
Compressed fruit bars, consisting mainly of fruit and nuts, with added sweetening matter, and cereal bars, whether or not covered in chocolate, with the exception of bars which qualify as cakes, are standard-rated. Fruit bars are also confectionery if there is no added sweetening matter, though this matter is the ongoing subject of the Premier Foods case (V.20072 and  EWHC 3134 (Ch)).
Creatine is not a recognised food product, and so foods which are wholly or mainly made of creatine are standard-rated. Where it is clear that the main benefit to the consumer is the carbohydrate, protein or fat element, then it is considered to be food, and will be zero-rated unless it falls within one of the excepted items.
Foods sold as aids to slimming should be considered using similar criteria to those given above for sports foods:
- complete meal replacements are zero-rated; slimmers drinks based on milk or cocoa are zero-rated by virtue of items 5 and 6 overriding the exceptions;
- soups based on cellulose as an appetite suppressant are zero-rated;
- confectionery for slimmers is standard-rated;
- supplements taken in tablet form, such as vitamins, are standard-rated; and
- appetite suppressants and slimmer’s laxatives are standard-rated.
In the case of Texas Touch Dallas Diet Ltd (EDN/83/0067), the tribunal considered a bar made of peanuts, bran, honey and other ingredients, which was intended to replace meals as part of a slimming plan. It was not sold through normal retail outlets but through a health store and slimming clubs. Though it looked similar to normal confectionery bars, it was found to be sickly and unpleasant in taste, such that it was unlikely that anyone other than a determined dieter would want to eat it. The tribunal accordingly found that it was not confectionery, and it was zero-rated as food within Group 1.
Meal replacement products
Foods that meet the very specific legislative criteria that define meal replacement products can be zero-rated. The legislation in question is SI 1997/2182 concerning Foods Intended for Use in Energy Restricted Diets for Weight Reduction Regulations 1997. This in turn enacted Commission Directive 96/8/EC on the same subject.
The legislation is very specific about what can claim to be a meal replacement product and such a foodstuff must meet very detailed requirements about its content and ingredients. If a trader claims that a foodstuff is a meal replacement product, they must be able to demonstrate that it meets these criteria.
Such a product provided in the course of catering would be standard-rated: the zero rating would only apply to any retail sale of those products.
Diabetic foods are treated in the same way as any other food, and are eligible for zero rating unless they fall within the excepted items, such as confectionery specifically for diabetics, which is standard-rated.
There are no special rules for health foods, so the normal rules apply. However, there have been several tribunal cases relating to products designed to be taken as food supplements for health purposes, particularly in the form of tablets. HMRC’s policy, consistently upheld by the tribunals, is that such products are not food for the purposes of Group 1, and so are standard-rated.
In the following cases, products sold as health supplements of various kinds were found by the tribunal not to be food, and therefore standard-rated:
- Marfleet Refining Co Ltd (MAN/73/0033): cod liver oil in both oil and capsule form
- Hunter Ridgeley Ltd (LON 94/2028) and Nature’s Balance (LON 93/2953A): edible algae in tablet form.
- Brewhurst Health Supplies (LON 91/2488Z): laxative preparation known as Ortisan, consisting of cubes of dried figs, senna leaves and senna pods, designed to be taken in measured doses.
- Grosvenor Commodities (LON 90/1805X): royal jelly capsules.
- Ayurveda Ltd (LON 88/1372X): herbal tablets were ruled not to be food (but a herbal concentrate resembling jam was accepted as a food).
- National Safety Associates of America (UK) Ltd (LON/95/3185A): fruit and vegetable juice-plus-fibre tablets.
- Durwin Banks (LON/04/1030): linseed oil in either liquid form or in capsules, ruled to be a food supplement and not a food.
Religious and sacramental foods
Food prepared under religious rules such as Kosher or Halal is eligible for zero rating on the same basis as other foods.
- Communion wafers and unfermented wine are zero-rated. Alcoholic communion wine is standard-rated.
- Seder foods (kosher food for ritual Passover meal), including grape juice, are zero-rated.
These consist of a package containing all of the raw ingredients necessary to make a specific recipe sold with the package. Usually these comprise zero-rated foodstuffs but often include small amounts of standard-rated items, for example pieces of chocolate or small amounts of alcoholic beverages to be used in making sauces.
It is our view that these are entirely zero-rated as food for human consumption. The standard-rated items are minor and are sold for the further enjoyment of the zero-rated foodstuffs which form the majority of the supply. It is not a supply of catering, as the food requires further preparation.