Bar owner wins five-year legal tax battle over VAT after claiming his 'super juices' are food
A bar owner has won a five-year legal battle over tax payments after successfully claiming that his “super juices” are food.
Kris Talikowski, who runs The Core juice bar in Swindon, Wiltshire, refused to pay VAT on his drinks, having marketed them as a “meal replacement”.
His legal battle with Her Majesty’s Revenue and Customs (HMRC) began in 2015, and he won his case three years later when a tax tribunal ruled in his favour.
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The First-tier Tribunal ruled that the juices, made from fruit and vegetables, were not beverages so were not subject to the standard rate of VAT.
And that ruling has just been upheld by two judges who dismissed an appeal from HMRC to the Upper Tribunal (Tax and Chancery Chamber).
Under current tax rules, most food is VAT-free and venues aren’t required to charge it on cold takeaway food unless it is eaten in a specific place.
However, VAT is payable for purchases including sports drinks, soft drinks and mineral water.
HMRC had claimed the original tribunal made errors in how it classified the juices.
But speaking after winning his latest case, Talikowski said: “This was not a cynical attempt to avoid paying VAT.
“One of our main arguments is that the programmes are used by our customers as meal replacements.
"This is not the same as buying a drink because you are thirsty or as a treat.
"Our juice programmes also have health benefits and are also used by several of our clients to aid their own weight loss journeys.
“There is also the fact that VAT can often disadvantage smaller traders and producers in the food and drink sector who have to pass on those costs to the consumer. They don’t have the economies of scale of much bigger brands.”
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Joanna Vicary, acting for HMRC, claimed the original hearing attached too much weight to the way the juices were marketed as meal replacements.
But two appeal judges concluded that the lower court had considered all the relevant factors.
In a written judgement handed down last month, Mr Justice Zacaroli and Judge Timothy Herrington said: “We see no basis on which we should interfere with the decision.”
A spokeswoman for HMRC said it was “carefully considering the judgement”.
HMRC has until the middle of December to apply to take the matter to the Court of Appeal.
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