Thirst for zero rating

19 October 2010

Issue: 4277 / Categories: Tax cases , VAT

GSK (TC688)

In a case involving VAT legislation and the definition of an energy drink Glaxosmithkline Services Unlimited (GSK) appealed against an HMRC ruling regarding one of its products Lucozade Sport.

The issues included whether both the pre-made or powdered mix sports drink constituted a beverage or a drink and whether the products should have been zero rated. HMRC ruled that the product was standard rated in both forms.

Under VATA 1994 Sch 8 food is exempt from tax except ‘Other beverages (including fruit juices and bottled waters) and syrups concentrates essences powders crystals or other products for the preparation of beverages’.

HMRC contended that the products were within this definition. GSK argued that as the products were ‘liquid food or functional food’ rather than ‘beverages’ and therefore qualified for zero-rated VAT.

The tribunal’s findings were:

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