The 23 September 2026 edition of Indirect Tax Weekly Talking Points analyses the First-tier Tribunal decision in Minerva Research Labs Ltd v HMRC, where collagen-based drinks were held to be standard-rated for VAT, not zero-rated as food. The tribunal determined that the products’ primary function was as a dietary supplement rather than a beverage for human consumption in the ordinary sense. This ruling reinforces the narrow scope of VAT zero-rating for food and beverages under Schedule 8, Group 1 VATA 1994. The edition also covers HMRC’s latest guidance on VAT recovery for electric vehicle charging and updates on Making Tax Digital for VAT penalties.
Key Takeaways
- Functional Classification Test: Products marketed primarily for health or cosmetic benefits fall outside zero-rating, even if consumed as a drink.
- Marketing Determines VAT Liability: The tribunal placed significant weight on product branding, packaging, and advertising claims in determining the ‘nature’ of the product.
- Sector-Wide Impact: Manufacturers of functional beverages, protein waters, and nutraceutical drinks must reassess VAT treatment and pricing models.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
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