HMRC is in the dog house after the Upper Tribunal (UT) dismissed its appeal to overturn an earlier tax tribunal decision that some specialist canine food products should be zero-rated for VAT when they were fed to working dogs.
In the case R & Commrs v Roger Skinner Limited  0204 (TCC), HMRC was appealing against a First Tier Tribunal (FTT) ruling on products made by Roger Skinner Ltd, which HMRC argued had been incorrectly categorised as animal feed.
But the UT agreed with the FTT that Skinner’s products, which were specifically designed to meet the nutritional requirements of working dogs and gun dogs, did not constitute either ‘pet foods’ or ‘meal’ for dogs and so should take the VAT zero-rate.
The UT reviewed the FTT’s fact finding and evaluation of the issues involved in determining the status of Skinner’s dog food products. This included looking at the composition of the food, packaging, the advertising to customers and customers’ use of the products. It agreed with the FTT’s reasoning when it determined that the majority of the range, with the possible exception of the Ruff & Ready product, did not constitute ‘pet food’ within the meaning of the law as it relates to VAT.
In addition, the appeal also examined the FTT’s approach to the second issue, which was whether or not the Skinner products were ‘meal’. HMRC said in its evidence that ‘meal’ includes muesli-like products and can encompass complete foods as well as mixers, and so the range fell into this category.
The judges dismissed this argument and supported the FTT’s conclusion that ‘meal’ means a mixer for use with meat or canned dog food made primarily from wheat flour with other ingredients and baked; and in particular made from the same or similar ingredients to a dog biscuit and baked in the same way but crumbled or broken up rather than cut into shapes.
It agreed that the FTT’s analysis was correct in determining that Skinner did not manufacture dog biscuits nor dog meal in the sense of this baked mixer food, since all the products were complete foods in the sense of being nutritionally complete feeds.
Since the UT rejected HMRC’s criticisms of the FTT’s approach to the issues, the HMRC’s appeal was dismissed. The judge said: ‘to my mind, however, the FTT’s conclusions were reasonably open to it and cannot be disturbed. It does not matter whether the FTT could reasonably have taken a different view’.
Details of the case are available here: http://www.tribunals.gov.uk/financeandtax/Documents/decisions/HMRC-v-Roger-Skinner.pdf