Cannabidiol seller wins appeal over late VAT amendment

HMRC has lost a First Tier Tribunal (FTT) appeal to make a late amendment to their statement of case in a £430,000 VAT appeal over zero rating of cannabidiol (CBD) products

On 28 February 2020, the CBD Flower Shop Ltd had written to HMRC seeking their agreement that the cannabinoid products it sold should be classified as food and zero-rated for VAT purposes. This is in line with EU directions on food classification.

However, HMRC did not agree and issued assessments of £430,473.36 on the basis that the CBD products should be standard-rated.

CBD appealed to the FTT on 29 November 2021 and following its direction of 10 March 2022, HMRC filed and served its statement of case on 5 May 2022.

After the initial filing of its statement of case, HMRC applied to amend this, arguing that an additional reason for denying the zero-rating was that the product was illegal.

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