Kalron Foods Ltd v Her Majesty's Revenue & Customs

Facts

The appellant, Kalron Foods Ltd, retails a product called "Zumo Fresh Blend" from outlets known as "Zumo Fresh Smoothie Bars", an increasing number of which operate in England. The product is made by feeding raw fruit and/or vegetables, chosen by the customer from a non-exclusive "menu", into a large liquidising machine of American manufacture which pulps them and discards the inedible parts, leaving a thick, cold, uncarbonated drink containing not merely the juice but the whole of the fruit or vegetable in drinkable form. It is handed to the customer in a disposable plastic cup, with a lid, ice or a straw if wanted, and is typically taken away for consumption elsewhere. The appellant's right to market the "Zumo" brand in England derives from a master franchisor in Ireland. The appellant treated the supplies as zero-rated as food of a kind used for human consumption under section 30(1) of and Schedule 8, group 1, item 1 to the Value Added Tax Act 1994. HM Revenue and Customs classified the product as a beverage, and hence as excepted item 4 in group 1, attracting VAT at the standard rate. The appellant appealed to the VAT and Duties Tribunal, sitting in Birmingham, where the blending machine was demonstrated and the tribunal tasted a fruit blend and a vegetable blend.