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HMRC internal manual

VAT Food

HM Revenue & Customs
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Items benefiting from the relief: what is food?: food packaging: normal and necessary packaging

Prior to the decision of the Court of Session in March 1992 in the case of United Biscuits (UK) Ltd T/A Simmers (EDN/90/0049) described below, our view of normal and necessary packaging was that the term applied to packaging which was necessary and appropriate for the food product it contained, and if reusable it was the most economic form of packaging, permanently and prominently marked with a description of the contents and supplier’s name.

The examples above were uncontroversial; but there have always been problems with more elaborate packaging where it is arguable that containers supplied with food exceed what is strictly necessary, or have such potential for further use after the food is finished that this might be the real reason for the purchase.

In the case of United Biscuits trading as Simmers we ruled that a supply of biscuits in cellophane wrappers packed in a decorative tin, which was capable of being used as a container after the biscuits were eaten, but not specifically intended to be used in this way, was a mixed supply in which the tin must be standard-rated. The tin had attractive scenes printed on the top and sides, and a description of the goods and supplier printed only on the bottom. It was stated by the appellant that: about 3% of biscuits sold were packed in tins; they were in peak demand at Christmas; the tin would substantially increase the shelf life of the product; and in this case the tin cost the supplier 55% of the total combined price of the product.

The tribunal decision, upheld by the Court of Session on appeal by Customs and Excise, was that the packaging was both normal and necessary for the product. The packaging was intrinsically expensive, but the appellant sought only to recoup his costs on it rather than make a profit and it was no more elaborate than necessary to sell the biscuits in the particular sector of the market aimed for. The Court of Session held that the tin was subordinate to the supply of biscuits. What was supplied was biscuits in a tin, rather than a general purpose container with biscuits in it. The Court held: the tin was integral to the biscuits, not merely in the sense that it was the container in which they were in fact packaged, but further in the sense that it served the supply of these biscuits to a restricted, quality market as well as prolonging their shelf-life and keeping the biscuits in better condition once consumption of the biscuits had begun.  

The appeal was therefore upheld and the tin of biscuits zero-rated.