- Dispute Overview: The case involved Global by Nature (GBN), which imported and sold powdered vegan food supplements in the UK. The central issue was whether these products qualified as “sports drinks” under Item 4A of Schedule 8 to the Value Added Tax Act (VATA), impacting their VAT classification.
- Interpretation of “Sports Drink”: The First-tier Tribunal (FTT) analyzed the statutory definition of “sports drinks,” concluding that they must contain significant carbohydrate levels (typically sugar) and may include salts. GBN’s products contained insufficient carbohydrates (no more than 1g per serving) and salts (max 2%), leading the FTT to determine they did not meet the criteria for classification as sports drinks.
- Marketing Analysis: While the FTT ruled in favor of GBN based on product content, it also examined the marketing approach. The “Classic” and “Plus” products were marketed as nutritious superfoods, while the “Warrior” product was explicitly marketed to enhance physical performance. Therefore, “Warrior” could be classified as a sports drink due to its targeted advertising, while the others were not considered similar drinks.
Source KPMG
