VAT on supplements
VAT on supplements
Is there VAT on supplements and “sports drinks”? This question has been considered by the First tier Tax Tribunal with regard to a VAT liability dispute in the case of Global By Nature Ltd. The products considered were Sunwarrior protein powders. Following this VAT liabiity dispute it seems that VAT on supplements such as protein powder products seems to be able to be “sports drinks”.
What is a “sports drink” includes products that are powders for the preparation of drinks and so are “drinks” as described in the VAT Act 1994 as follows:
“Sports drinks that are advertised or marketed as products designed to enhance physical performance, accelerate recovery after exercise or build bulk, and other similar drinks, including (in either case) syrups, concentrates, essences, powders, crystals or other products for the preparation of such drinks.”
If you sell “sports drinks”, powdered supplements or protein powders, and you’re charging VAT at the moment, please do get in touch as you might be entitled to a VAT refund.
Tax Tribunal findings
There is no definition in the VAT Act 1994 as to what is a “sports drink” and the First tier Tax Tribunal considered the ordinary usage. included in numerous dictionary definitions of the term, including the following:
(1) “a drink that consists mainly of water, electrolytes (such as sodium or potassium), and carbohydrates (such as sucrose or fructose) and that is designed to replenish those substances in the body during or after usually strenuous exercise” (Merriam-Webster);
(2) “a type of cold drink that contains sugar and other ingredients that help you to get back energy lost through exercise” (Oxford Learners Dictionaries); and
(3) “a soft drink containing electrolytes such as sodium, potassium, and chloride, and a high percentage of sugar, designed to restore energy during or after sporting activity or strenuous exercise” (Oxford Languages Dictionary, used by Google).
(4) “a drink containing sugar and salts, etc designed to help replace fluid and energy lost through the physical exertion of sport” (Collins); the following example of usage is cited:
“Sports drinks such as Gatorade or Powerade should generally be avoided in favor of water unless you’re doing an intense workout. That’s because some sports drinks contain more than 30 grams of added sugar…and you may not need its carb- and electrolyte-heavy fuel if you’re just going for a 45-minute easy ride”.
These definitions and usages refer to “sports drinks” as containing carbohydrates. together with salts (such as sodium and potassium) which provide electrolytes. The BSDA says that the level of carbohydrate is “significant”, and the Oxford Languages Dictionary that they contain a “high percentage” of carbohydrates. Merriam-Webster defines sports drinks as consisting “mainly” of three ingredients, one of which is carbohydrate, and the example cited refers to “carb- and electrolyte-heavy fuel”. The Oxford Learners Dictionary and Collins both defines sports drinks by reference to their sugar and salt content.
VAT legislation
The VAT Act refers to “other similar drinks”. Those words expand the statutory phrase with regard to VAT on supplements so it encompasses those “sports drinks” which are not “advertised or marketed as products designed to enhance physical performance [etc]” but are similar to sports drinks which are so designed. In other words, to come within this part of Item 4A, a product must first be a “sports drink”. Since the Products are not “sports drinks”, there is no need to consider whether they are the sort of “sports drink” which is advertised or marketed in the way required to fall within Item 4A of Schedule 8 Group 1 VAT Act 1994.
Solve VAT
More information about VAT on supplements and any other VAT issue contact our VAT accountants
HMRC
HMRCs guidance concernig VAT on supplements and sports drinks.