A case that has proved, yet again, you should never optimistically apply the VAT rules is Westland Horticulture (TC07283). In a case looking at whether a supply should be classified for UK VAT as food or lawn seed, apparently there was no argument. The tribunal decided that a grass seed lawn repair kit should be treated as animal feed and zero rated. Should the appellant (or his advisors) have seen the writing on the wall?
A key approach
The hugely significant factor in applying the food and animal feed (and as a result the golden grail of zero-rating relief) is to look at what the customer thinks they are buying. We have seen this distinguishing line being applied in other ‘food’ related cases. Examples include the distinction between bicarbonate of soda as either a cleaning agent (standard rated) or a baking ingredient (zero rated). Similarly, salt sold to clear ice (standard rated) versus table salt sold to sprinkle on your chips (zero rated).
So UK VAT on food or lawn seed? In the Westland case, the major ingredient of the lawn repair product was generic grass seed. The very same seed sold to grow grass as animal feed. However, the product also contained various nutrients and a nifty dispenser aimed at repairing discreet patches of domestic lawns. The marketing supported this purpose entirely……which is precisely why Westland lost its argument. The product was not in any way marketed or promoted as animal feed. Instead it was clearly intended for use on domestic lawns, as a repair kit, and for that reason could not be a zero rated food item.
The 360 view of what is being supplied and what is been purchased is an incredibly powerful thread now running through how VAT is administered. Looking at marketing literature to form a view of what the customer thinks they are buying is equally as valid as forming a view of what the supplier believes they’re selling. You just can’t be too careful with this slippery tax so please do get in touch if you’re ever not sure – sooner is always better.