On February 14, 2018, the U.K. Upper Tribunal released their decision on an appeal filed by Nestlé UK Ltd., regarding the VAT treatment of strawberry and banana flavoured Nesquik, The ruling validates tax rule applying varying VAT treatment based on the particular flavours.
Specifically, Justice Snowden affirmed HMRC and First-Tier Tribunal (FTT) findings that although chocolate flavoured Nesquik is properly zero-rated, strawberry and banana flavoured powders (as well as other flavours aside from chocolate) are properly taxed at the standard rate.
In short, the decisions rest on the fact that the non-chocolate products do not fit into the "Items Overriding the Exceptions" listed in Schedule 8 of the Value Added Tax Act. In comparison, the Tribunal noted that cocoa is so listed and as such is properly zero-rated.
For more information on this flavourful decision, please see the case ruling here.
About the Author
Katie Smethurst is a Junior Regulatory Counsel at Sovos. Within Sovos’ Regulatory Counsel function, Katie focuses primarily on international and U.S. based indirect tax research and analysis. Katie is a member of the Massachusetts and New Hampshire Bars, earned her B.A. from Roger Williams University and earned her J.D. from Suffolk University Law School.More Content by Kaitlyn Smethurst