It’s cost thousands of pounds and taken five years for Kris and his legal team to win an argument that his juice programmes – offered through his Swindon business The Core – should not attract VAT as is the case with other ‘food’ products .
HMRC had argued his juice programmes were just a collection of ‘beverages’ and therefore as beverages, they should be standard rated. Kris argued that they were actually ‘liquid food’ as they were comprised purely of juiced and blended fruits and vegetables, and therefore should not attract VAT, just like other essential food products.
Kris said: “This was not a cynical attempt to avoid paying VAT. This was a matter of principle. 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.”
Kris, through his business The Core which is based in Old Town Swindon, believed that his Juice Cleanse Programmes, made up of four blended juices and smoothies per day, should be legally classed as a food product. Supported by accountants Grant Thornton and Barrister Max Schofield, Kris has been on a five year journey to get the final ruling which came recently.
The Core, named as the appellant, initially won the case in December 2018 at a First Tier Tax Tribunal (the first court to challenge tax decisions by HMRC). HMRC appealed against the decision which was dismissed. HMRC appealed again, this time to the Upper Tier Tribunal. At this stage the majority of their appeal was refused apart from one ground which was to argue the weighting of how the first tier made their decision. This meant the case had to go for a final hearing.
The final appeal took place last month and was dismissed by Justice Zacaroli and Judge Timothy Herrington - meaning The Core had won the case.
Kris said: “This is a great result that means our health programmes comprised entirely of fruits and veg can be accessible to more people. We have a system in the UK that favours large mass market food producers that generate cheap foods that are contributing to an obesity crisis across the UK.
“The government have tried to promote ‘5-a-day’ and their Change4Life programmes as ways to change behaviours. I see the way forward as focussing our collective attention on boosting intake of fruit and veg to control weight and improve recovery of medical conditions and diseases. It was Hippocrates that said “let food be thy medicine”, it’s about time we started taking his advice.”
The rules surrounding food and drinks in regards to VAT are complex, however, broadly it means ‘food’ seen as ‘essential’ is exempt from VAT. Items such as confectionary and beverages are seen as ‘luxury’ and so attract VAT which means they are 20 per cent more expensive for the consumer in many cases.
One of the key witnesses for The Core in the original tribunal was Emma McLaughlin, a magistrate from Cheltenham who took on their Juice Cleanse Programmes.
"I first came across The Core in 2014 and after having battled a major condition ten years ago I’ve been focussing on looking after my health with the best nutrition possible. Initially I did a Juice Cleanse Programme for weight loss purposes and then I started to feel much better; my skin wasn't spotty, my stomach wasn’t so bloated and I stopped getting any colds, flu and bugs.
“After doing intermittent full programmes I tend now to have three juices a day as meal replacements and then a traditional meal in the evening with my family. I have had a lot more energy so I've continued doing them on a constant basis for the health benefits of eating basically raw vegetables. I’m not very keen on vegetables so it’s a way of getting vegetables into my body.”
Daniel Rice from Grant Thornton who represented The Core said “I’ve been working with Kris and Max on this case for the duration and we are delighted with the outcome. It’s a good opportunity to finally clarify the law on juice cleanse programmes.”
Kris has run the Core in Old Town Swindon for the last 8 years. He is a well-known ambassador for Swindon and also a passionate health advocate.