Zero rating dispute

Liability of bicarbonate of soda used in cooking

The issue in this case was straightforward: is bicarbonate of soda sold on supermarket shelves in the food section subject to VAT at the zero or standard rate?

The taxpayer said it was ‘food of a kind used for human consumption’. Its packaging referred to the product as a ‘raising agent for soda bread cookies and gingerbread’. The taxpayer said it should be treated as zero rated (VATA 1994 Sch 8 group 1 item 1).

HMRC disagreed saying the product should be standard rated ‘regardless of its usage’. It said bicarbonate of soda was a ‘bulk chemical’ that could be added to food for a ‘technological purpose’ but was of no nutritional value. The average consumer when buying it was aware that it had multiple uses including as a cleaning product. HMRC raised an assessment...