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HMRC internal manual

VAT Food

Excepted items: beverages: specialist drinks

In considering the liability of a specialised or unusual drink, you will need to ask several questions in sequence:

  • Firstly - Is it a food?

Not all drinks are foods, and those that are not do not come into the scope of Group 1 zero-rating at all. Liquids taken for medicinal purposes, or liquid food supplements such as cod liver oil, are thus standard-rated because they are not food: there is no need to go on to determine whether they are also beverages.

  • Secondly - If a liquid is a food, is it also a beverage under the Bioconcepts criteria (VFOOD7520)? If not, it is zero-rated. Do not assume that because a drink is specialised to a particular market or for particular consumers that it is not a beverage.
  • Thirdly - If it is a beverage, it is standard-rated unless it falls within one of the items overriding the exceptions, (tea, cocoa, coffee, milk and the like), when it is zero-rated.

Slimming products

Complete meal replacements in liquid form, to be used as part of a slimmer’s diet, such as soups, with or without cellulose as a bulking agent to suppress appetite, are zero-rated: they are foods which are not considered to be beverages. Many other slimmer’s dieting drinks are preparations of milk, and these are also zero-rated, by virtue of overriding item 6. However, beverages that are not milk based or otherwise zero-rated are standard-rated.

Liquid invalid diets

Refer to section VFOOD1680 on the liability of various liquid invalid foods.

Sports drinks

Refer to section VFOOD2700 and VFOOD7590 on the liability of such products. See Excepted Item 4A.

Bodybuilding and athletic products

Prior to the introduction of Excepted Item 4A these products were treated in the same way as slimming drinks. Complete meal replacements or drinks high in protein and / or nutrients designed as supplements for meals, and high carbohydrate drinks (the majority of which is not sugar), taken as performance boosters, were zero-rated as food. Beverages based on milk or milk extracts were zero-rated by overriding item 6. Products consisting of pure creatine are not considered to be food and so are standard-rated.

From 1 October 2012 products that fall for treatment under excepted item 4A are standard rated.