Healthy drinks maker launches VAT fight
Wednesday April 15, 2009
A leading healthy drinks maker has launched a new tribunal application claiming its products should be exempt from VAT charges.
Innocent, which produces a range of smoothies, has hired PricewaterhouseCoopers to act on its behalf in its fight with HM Revenue and Customs.
Under current UK tax rules, VAT is not paid on "essential" food and drinks, but must pay VAT of 17.5 per cent of "luxury" items, which included fruit juices and smoothies.
Richard Reed, co-founder of Innocent, told the Telegraph it was "absurd" that the firm’s products contain two full portions and are still subject to full taxation.
"Fruit isn’t taxed as long as it’s whole. Just because we crush it and put it in a bottle, we are subject to full VAT. We think we can argue that Innocent smoothies should be a food rather than a beverage under the Revenue’s definitions," he added.
Innocent recently sold a stake of up to 20 per cent of the firm to Coca-Cola for £30 million.