VAT rates and selling take-away dairy products.

HMRC Reference:Notice 701/14 (May 2002) will be useful in showing you what food is ZR and what is SR

.2 Food not supplied in the course of catering
Most food of a kind used for human consumption (see paragraph 2.3) is zero-rated. There are, however, some exceptions as follows:
You must always
standard-rate (SR)…

ice cream, similar products, and mixes for making them – see 3.5;

confectionery, apart from cakes and some biscuits, – see 3.6;

alcoholic beverages, – see 3.7;

other beverages, and preparations for making them – see 3.7;

potato crisps, roasted or salted nuts and some other savoury snack products – see 3.8 and;

products for home brewing and wine making – see 3.7.


But you can ZR:


frozen yoghurt that is designed to be thawed before being eaten;

drained cherries and candied peel; and

milk and milk drinks, tea, maté, herbal tea, coffee & cocoa; and preparations of yeast, meat and egg.

Also

3.5 Ice cream and similar frozen products

You must standard-rate your supplies of any product designed to be eaten while frozen.
Products which are supplied frozen, but have to be cooked before they can be eaten, or which have to be thawed completely before eating, are zero-rated.


Hope this helps

Link on HMRC website is:

http://customs.hmrc.gov.uk/channels...ument&columns=1&id=HMCE_CL_000118#downloadopt

Obtained by going on www.hmrc.gov.uk and typing 701/14 into the search box

mrRed said:

I'm doing some research on setting up a smoothie/milkshake van/stand and came across this info on a potential suppliers website. Being quite new to all this, I don't really know a terrible amount of the in's and outs of VAT etc, and was wondering if anyone could tell me more about this particular situation?

The company do also mention that they are not VAT specialists, but have found this info out through their own enquiries.

Thanks in advance.


'It is one of those anomalies that VAT is charged on some products and not on others. In the case of smoothies, they will ALWAYS attract VAT if they are being sold to be consumed on the premises, just like any foodstuff. As soon as you offer seating etc. the VAT kicks in !
If you are selling all or part of your smoothie production for consumption OFF THE PREMISES - i.e. for TAKE AWAY then you can possibly benefit from zero rating of these products. It is strange but true that at the moment a PURE FRUIT SMOOTHIE - WITHOUT any FROZEN YOGURT will atttract VAT even for take away. However A YOGURT & FRUIT SMOOTHIE is ZERO RATED for VAT as long as it has a predominant element of frozen yogurt and has the appearance and texture of a milky drink.
So the GOOD NEWS is that if you make smoothies from our SMOOTIE PACKS and FROZEN YOGURT and sell them for take away you will not have to charge VAT on them ! This is great news for your turnover and profitability ! So make sure when you order some of our SMOOTHIE OPERATOR SMOOTIE PACKS that you also order FROZEN YOGURT !
If you look in the section on the NUMBERS you will see the difference this can make !

NOTE: The VAT exemption does not apply for NON DAIRY smoothies made with Sorbet.'

Click to expand...

Zero rating is the holy grail of VAT, reclaim all your input VAt but pay no over to HMRC.

Fruit smoothies have been done to death, with a couple if high street names failing to get their juices zero rated. If you buy an orange, you are buying a fruit and it is zoer rated. When you crush the orange, you are selling a beverage, not a fruit and as a beverage is standard rated.

Here is HMRC's internal guidance on the matter :-

http://www.hmrc.gov.uk/manuals/vfoodmanual/VFOOD7660.htm

and the same guidance but covering other items :-

http://www.hmrc.gov.uk/manuals/vfoodmanual/vfood7500.htm

By all accounts, if you do sell a fruit/yog hybrid, you need to be able to argue to HMRC that the product is predominantly milk (yog) based, not fruit based. HMRC take the view, "What is the customer buying?" so ask yourself WHAT are you selling, a milk based drink or a fruit based drink?.