Smoothie maker Innocent has hired PricewaterhouseCoopers to act on its behalf at a tribunal hearing, in an effort to get its popular crushed fruit drinks exempted from VAT.
The co-founder of Innocent, Richard Reed, told the Telegraph that it was 'absurd' that fast food items are excused from VAT charges while Innocent's drinks - which contain healthy components such as two portions of fruit - are fully taxed.
According to UK tax rules, consumers don't have to pay VAT on foods and drinks that are seen to be 'essential', but they must pay 17.5% on 'luxury' items such as fruit juices.
Reed said '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.'
Grant Thornton said that Innocent's application could be problematic since 'tax rules on food are set under European law and cannot be tinkered with individually'.
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