VAT Food Nuance! (Oct 25)

Those following know we regularly discuss the nuances that come up when considering VAT on food items. A recent FTT decision turned out to be no laughing matter as Telamara challenged HMRC over the VAT treatment of nitrous oxide (N₂O) canisters used exclusively for whipping cream. They argued these culinary-use chargers should be zero-rated as “food of a kind used for human consumption.” HMRC disagreed.

The heart of the case was whether N₂O, which was confirmed as food grade regulated and was being used in food prep, could be classified as “food” under VAT law.

The Tribunal considered

• How N₂O functions in culinary use (it whips but doesn’t feed)

• Its regulatory status as a food additive

• Whether the N₂O in the chargers is nutritious

• Would an informed consumer consider N₂O “food”

• Comparisons with other substances like bicarbonate of soda and beer gases

The verdict?

In the end the FTT sided with HMRC ruling that N₂O isn’t “food” for VAT purposes. It doesn’t alter the nutritional or compositional value of the cream, it just changes its texture. Similar to how carbon dioxide is used in the production of beer to form its head. The verdict affirming that being food-grade isn’t enough to qualify for zero-rating.

This case is a timely reminder: just because something is used in food, doesn’t automatically mean it is food, at least not in the eyes of VAT law.