Court of Appeal takes s’more principled approach to the interpretation of VAT food exemptions
On 21.3.25 the Court of Appeal handed down judgment in HMRC v Innovative Bites Ltd [2025] EWCA Civ 293, allowing HMRC’s appeal.
Whilst the product involved was a “Mega Marshmallow”, the case is of principle importance in relation to the correct approach to how the Notes to the exemption schedules in VATA 1994 work (see, [14]). The Court of Appeal found that the types of Notes under consideration are an inclusive definition, (see, [41])) and that where a product can be said to fall within them, unless it would be absurd or it is obvious that, in the light of their purpose, the provisions were not intended to apply to the product, then they fall within the definition (see, [44] and [46]). In particular, the Court of Appeal rejected the argument that such definitions are either akin to a rebuttable presumption (see [40]) or are capable of being read down on an ejusdem generis basis (see, [45]). The case is now to be remitted to the FTT for it to decide whether the “Mega Marshmallow” meets the relevant definition.
Howard Watkinson led for HMRC in the Court of Appeal. Max Schofield appeared for the Intervener, DuelFuel, by way of written submissions
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