Swindon businessman wins five-year court battle against taxman over juice programmes

A small business owner from Swindon has taken on HMRC over the VAT charged on his company’s juice cleanse programmes – and won.

The landmark case has cost thousands of pounds and taken five years for Kris Talikowski and his legal team to win an argument that his juice programmes – offered through his Swindon business The Core – should not be subject to VAT as ‘luxury’ food products like hot or soft drinks are.

HMRC had argued his juice programmes were just a collection of beverages and therefore, as beverages, they should be standard rated.

The Core argued that they were actually meal replacement programmes as they were comprised purely of juiced and blended fresh fruits and vegetables, and marketed as such, and should not attract VAT.

Kris said: “This was not a cynical attempt to avoid paying VAT. This was a matter of principle. One of our main arguments is that the programmes are used by our customers as meal replacements. This is not the same as buying a drink because you are thirsty or as a ‘treat’.

“Our juice programmes also have health benefits, and are also used by several of our clients to aid their own weight loss journeys.”

“There is also the fact that VAT can often disadvantage smaller traders and producers in the food and drink sector who have to pass on those costs to the consumer. They don’t have the economies of scale of much bigger brands.”

Supported by accountants Grant Thornton, who appointed barrister Max Schofield, Kris has spent five years fighting HMRC on the issue.

The Core initially won the case in December 2018 at a First Tier Tax Tribunal – the first court to challenge tax decisions by HMRC. HMRC appealed against the decision, which was dismissed.

HMRC then appealed again – to the Upper Tier Tribunal. At this stage the majority of their appeal was refused apart from one ground which was to argue the weighting of how the first tier made their decision, meaning the case had to go for a final hearing.

The final appeal took place last month and was dismissed by Justice Zacaroli and Judge Timothy Herrington. HMRC said it was ‘carefully considering” the outcome of the case.

Kris said: “This is a great result that means our health programmes comprised entirely of fruits and veg can be accessible to more people. We have a system in the UK that favours large mass market food producers that generate cheap foods that are contributing to an obesity crisis across the UK.

“The government have tried to promote ‘five-a-day’ and their Change4Life programmes as ways to change behaviours. I see the way forward as focussing our collective attention on boosting intake of fruit and veg to control weight and improve recovery of medical conditions and diseases. It was Hippocrates that said “let food be thy medicine”, it’s about time we started taking his advice.”

The rules surrounding food and drinks in regards to VAT are complex, but basically mean that food is seen as essential – and therefore zero rated for VAT purposes – while confectionary and beverages are seen as luxuries.

In a 2010 case, HMRC won a ruling against Innocent smoothies, which the court agreed were luxuries. The test was whether a person would offer an ‘unexpected guest’ as a ‘general drink’ in a ‘social situation’.

Daniel Rice from Grant Thornton, who represented The Core, said: “I’ve been working with Kris and Max on this case for the duration and we are delighted with the outcome. It’s a good opportunity to finally clarify the law on juice cleanse programmes.”

Kris has run the Core in Old Town Swindon for the last eight years. He is a well-known ambassador for Swindon and also a passionate health advocate.

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