Morrisons loses £1m VAT appeal case over Nakd bars

Supermarket giant Morrisons has lost an appeal against HMRC over the decision that products sold under the Organix and Nakd brands were standard rated for VAT purposes

In the First Tier Tribunal (FTT) in February 2021, the supermarket appealed against the HMRC decision to class Nakd bars and Organix bars as confectionery and not cakes, as well as appealing against the tax authority’s refusal to repay £1,000,163.39 in VAT paid on the bars.

The retailer claimed it had overpaid £1m in VAT to HMRC over 18 types of the bars, which they said had been wrongly rated for tax, between 2014 to 2018. Morrisons also brought the claim in relation to Organix bars, claiming they had overpaid £97,162.80 in VAT regarding the snacks.

Morrisons argued that the bars, which come in a number of fruit and nut mixes including lemon drizzle and banana bread, are not confectionery, and should have the same VAT zero-rated as cakes.

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