Innocent loses VAT battle over smoothie classification
Tax tribunal finds that smoothies are a beverage rather than ‘liquefied fruit salad’ and subject to 17.5% VAT
SMOOTHIE MAKER Innocent has lost out on a massive VAT rebate after a tax tribunal ruled that its products should be classed as a beverage rather than “liquefied fruit salad”.
The ruling on the dispute, which dates back to April 2007 when Innocent tried to claim back VAT on three years of smoothie sales, found that the taxman was within its rights to refuse a rebate as the product was classed as a beverage and therefore not an essential item.
Innocent had tried to convince the tribunal that its smoothies should instead be classed as liquefied fruit salad and be subject to the zero rate of VAT, as a bowl of the raw ingredients it uses are not subject to VAT.
However, tribunal judge Barbara Mosedale said that while the smoothies do have some snack-like properties “it is drunk as a beverage”.
Innocent chief executive Richard Reed, said. “This ruling is definitely not in the interest of the nation’s health. It’s absurd that smoothies, which contain two portions of fruit and help people live more healthily are subject to VAT at full rate when junk food like burgers, chips and doughnuts are sold tax free.”
