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HMRC internal manual

VAT Food

Excepted items: beverages: tea

Item 4 of the items overriding the exceptions applies the zero-rate to all varieties of leaf tea, powdered instant tea, and tea bags, but not to soft drinks containing tea, which are generally fruit-flavoured, containing tea as one of many ingredients, and compete in the same market as other soft drinks.

The tribunal considered one such product in the case of Snapple Beverage Corporation (LON/94/1991A). This company produces a drink called Snapple Real Brewed Iced Tea in a variety of fruit flavours. Tea solids produced by drying brewed leaf tea are incorporated during its manufacture.

The appellant argued that the product was either tea in its ordinary meaning, or a preparation of tea, and that the meaning of the term should be looked at as it is today, which may not be the same as it was twenty years ago.

The tribunal found that tea within overriding item 4 is usually sold as leaf, and if sold ready brewed would generally be standard-rated as by way of catering. It would not normally contain flavourings other than lemon, and it would be made with boiling water and not ready-sweetened, as opposed to the hot but not boiling water and added glucose syrup used in producing Snapple. The predominant taste was the fruit flavour, and it would have been difficult to detect tea as a flavour in a blindfold test. Overall it was not considered to be tea pure and simple, in the ordinary use of the term and the appeal was dismissed.