UK: Smoothie maker calls for support in VAT fight
A UK smoothie maker is hoping to galvanise industry support for a change in the tax on the category after the country's High Court ruled the drinks should be subject to VAT.
Kalron Foods, which operates the Zumo Fresh Smoothie Bars outlets, lost its fight to remove the VAT on smoothies.
On Friday (30 March), a High Court judge ruled that freshly-blended fruit or vegetable smoothies should be classed as beverages instead of foods. The ruling means that smoothies will be hit with VAT of 17.5%, compared to food products, which are not subject to the tax.
Anthony Round, head of development at Kalron, told just-drinks today (2 April) that the company is mulling whether to launch an appeal against the ruling, which affects some 40% of the firm's business.
Round said: "We have a turnover of GBP4.5m (US$8.89m) so this ruling will cost us a very substantial amount. We are looking to hold discussions with the British Soft Drinks Association (BSDA) and companies like Innocent and we're hoping to get a groundswell of opinion to get the Government to act."
Round said Kalron's smoothies should be classed as food because the company uses fresh ingredients and does not add preservatives.
However, according to UK reports, the High Court judge Mr Justice Warren ruled: "The blending clearly transforms a solid, albeit soft, food into a liquid which can be drunk. It is not obvious that the process cannot change the VAT treatment of the ingredients."
A spokesman for the BSDA told just-drinks that smoothie producers could hope for a change in the law or to get their products reclassified as food under existing tax legislation.
He said: "The Government is not joined-up on this point, which is pretty absurd. In their White Paper, they ask consumers to consume more fruit and vegetables under their 'five-a-day' policy. The White Paper should have included a change in the VAT on fruit juice and smoothies."
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