In a recent hearing before a tax tribunal, HMRC led the charge to insist that bicarbonate of soda (BoS) was a chemical not a food of a kind used for human consumption.
Why was this important?
HMRC had issued an assessment amounting to £291,000 to hapless food company, Phoenix Foods Ltd, as they had treated the sale of BoS to their customers as a zero-rated supply, and HMRC insisted that BoS was a chemical, an additive, and should have been a standard rated supply.
For non-culinary readers, BoS is a raising agent used when cooking cakes and certain types of bread. It helps to make the end-product light and fluffy!
Phoenix sold BoS to supermarkets who stacked the ingredient with other cooking essentials. BoS also features regularly in recipe books as a required ingredient.
The Tribunal judges had to endure lengthy presentations by food experts from both sides of the argument, but in the end decided that common sense needed to prevail.
Their decision reads:
“… in our view, the supply by Phoenix of bicarbonate of soda in a form that was intended for use primarily as a baking ingredient was a supply of “food of a kind used for human consumption”.
Accordingly, this judgement underlines the notion that it is necessary to examine the supplies made and their intended use by the consumer rather than consider other factors, such as alternative uses that the product could be turned: for example, BoS is also used as a cleaning agent.
As a result, Phoenix Food’s appeal was upheld and HMRC will need to decide if they want to take the case to a higher court. Hopefully, some of the lower court’s pragmatism will influence HMRC to let the matter rest.