In this week’s VAT news Vaughn Chown comments on the recent VAT decisions relating to mechanised bingo and sports drinks.
Fiscal neutrality upheld
Fiscal neutrality prevents Governments from treating similar goods or services differently for VAT purposes.
Rank Group Plc(Rank) successfully contended that collecting millions in VAT on Rank’s gaming machines and mechanised cash bingo was unjust and breached the EC principle of fiscal neutrality. HMRC argued that the VAT did not affect competition but the ECJ disagreed. A breach of the EU principle of fiscal neutrality had occurred because of the different VAT treatment. Rank’s bingo claims total over £250 million plus interest.
Lucozade Sport Drinks
The Upper Tribunal (FTC/06/11) has confirmed the decision in the First Tier Tribunal that Lucozade Sport Drinks and powders are not zero-rated.
GlaxoSmithKline Services Unlimited(GSK) contended that their supplies of sports drinks should be zero rated. The First Tier Tribunal decided that the products were beverages or other products for the preparation of beverages and therefore were excepted from zero rating under VAT ACT 1994 Sch 8 Group 1. The Upper Tribunal agreed with the decision of the First Tier Tribunal that GSK had not satisfied them that the drink fell outside of the scope of the expression “beverage” and was therefore standard rated.