UK: Taxes on smoothies queried

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Tax experts and school chiefs have attacked the UK Government for targeting the makers of smoothies for value added tax (VAT) payments. The drinks, which contain pure fruit and vegetables, attract a VAT charge of 17.5% - garnering the Treasury millions of pounds even though raw produce is zero-rated for VAT purposes. 

The UK smoothie market, valued at GBP32m in the retail sector, has seen enormous growth over the past decade as market leaders like Innocent and PJ's emerge. Grove Fresh Limited, a Surrey-based maker of fruit juices, highlighted the tax issue, resulting in HM Revenue & Customs confirming that juice makers should continue to be charged VAT.

Simon Newark, VAT expert at the London office of national accountancy firm UHY Hacker Young, says the laws are outdated and must change: "The Government says it is encouraging healthier lifestyle and better eating but this shows that the Treasury is swelling its own coffers by profiting from these initiatives," he said.

"The drinks made by many producers are 100% fruit and vegetables. It is crazy that they are taxed at a higher rate simply because they are squeezed into a bottle or carton. These outdated tax laws need to be changed."

David Vanstone, chairman of the Independent Schools Association and headmaster of North Cestrian Grammar School in Altrincham, Cheshire added: "It does seem strange that the Government is advising children and parents to eat healthier but is effectively charging for that advice. Children must be educated to distinguish between healthy food and junk food. Having premiums on healthy food compounds the problem. It is certainly easier for pupils to get their five portions a day from a smoothie than from individual pieces of fruit."

Sectors: Soft drinks

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