1. Indirect Tax Update for week ending 16 May 2014
The Upper Tribunal has issued two judgments this week. The first was in HMRC's appeal
relating to whether replacement roof panels for conservatories can be classed as
insulating materials and thus benefit from VAT at the reduced rate. The second relates to
whether a particular dog food supplied by the taxpayer was pet food.
Only in the world of Indirect Tax could one have such a lengthy and detailed debate
about whether or not a particular dog food constituted a pet food and whether, as a
consequence, the food qualified for zero-rating as animal feeding stuffs. In the case of
HMRC v Roger Skinner Ltd, the Upper Tribunal has issued its judgment and has
dismissed HMRC's appeal from the First-tier Tribunal which found that the dog foods
in question were largely zero-rated.
UK VAT law provides for the VAT zero-rate to apply to supplies of animal feeding
stuffs except for supplies of pet foods and biscuits and meal for cats and dogs. In 1994
HMRC accepted that food specially formulated and held out for sale for 'working' dogs
could continue to be treated as animal feeding stuffs and be zero-rated. In this case,
HMRC argued that the composition of the food and the way it was packaged and held
out for sale meant that it should not be zero-rated. However, the Upper Tribunal
concluded that, on the facts, the First-tier Tribunal was right to reach the conclusions
that it did. None of the products in dispute was "meal" for dogs. HMRC's appeal was
dismissed.
Comment – Having lost in two Tribunals, HMRC is unlikely to appeal this judgment.
Any such appeal must be viewed as 'barking' up the wrong tree but they have been a
bit like 'a dog with a bone' with this one!
By contrast, the Upper Tribunal has allowed HMRC's appeal in a case relating to the
supply of polycarbonate roof panels for conservatories. The First-tier Tribunal had
ruled against HMRC when it found that the panels in question qualified for the
reduced rate of VAT. In HMRC v Pinevale Ltd the Upper Tribunal has overturned the
decision of the First-tier Tribunal.
The Upper Tribunal considers that the First-tier Tribunal made an error interpreting
the relevant VAT law. Agreeing with HMRC's analysis, the Upper Tribunal held that 'a
material which is insulation for a roof is not the same thing as the roof itself. It
presupposes that there is a roof to which the insulating material is applied'.
Comment – This seems to be a sensible and logical judgment. The taxpayer in this
case was not represented as it had gone into creditor's voluntary winding up so no
further appeal on the issue is likely. The judgment does, however, set a binding
precedent.
For further information in
relation to any of the
issues highlighted in this
Indirect Tax Update
please contact:
London/South East
Karen Robb
karen.robb@uk.gt.com
The Regions
Stuart Brodie
stuart.brodie@uk.gt.com
The Midlands
Mike Sheppard
mike.sheppard@uk.gt.com
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Indirect Tax Update 20/2014