Weekly VAT News

Walkers Snack Foods Limited: Whether zero-rating applied to Sensations Poppadoms – UT

Walkers’ Sensations Poppadoms are made of potato granules (18%), potato starch (18%), and modified potato starch (approx. 4%). They also contain gram flour and rice flour. Potato crisps are excepted from the VAT zero-rating, as are “similar products made from the potato, or from potato flour, or from potato starch”. The Upper Tribunal has upheld the First-tier Tribunal’s decision that Sensations Poppadoms are “similar products made from the potato”, and accordingly standard-rated. The UT agreed with the FTT’s conclusion that the product is made from the potato, on the basis that “the potato” includes potato granules, and that, accordingly, the potato content is 39-40%, which is “significant”, particularly relative to other ingredients. The UT also found that the FTT’s conclusion that Sensations Poppadoms are similar to potato crisps, based on a multifactorial assessment, was reasonable (which is the test on an appeal). The UT did note that while “it may be possible to disagree with the weight given by the FTT to individual elements of its multifactorial assessment”, the overall assessment was reasonable and the decision one that the FTT was entitled to make based on the evidence. The UT dismissed Walkers’ appeal against the FTT’s decision. (Contact: Andrew Roberts)

Ingliston Driving Experiences Ltd: Application of temporary VAT reduced-rate – FTT

Ingliston Driving Experiences Ltd (IDEL) provides a range of driving experiences in various ‘supercars’ at off-road venues. Customers, accompanied by a professional driver, choose to either drive themselves or, sometimes with friends and family, be driven in a supercar in a simulated race. The FTT has held that these services were chargeable to VAT at the reduced rates which applied to supplies of a right of admission to shows, theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions and similar cultural events and facilities from 15 July 2020 until 31 March 2022 (as a COVID pandemic measure). In reaching its decision, the FTT concluded that the supplies were the “right of admission”, giving these words their “plain and ordinary meaning”, as people had paid to be admitted to enjoy their driving experience. Turning to the issue of whether the supplies were a qualifying type of attraction, the FTT found, following guidance from the CJEU in Erotic Center, that the services provided a right to collective enjoyment (it was far from a solitary experience, given there were other cars being driven at the venues and the presence of others in the car), it did not matter that non-paying spectators were also present, and the services were provided to a sufficient number of people. Finally, the FTT concluded that the experience was similar to a fair or amusement park: attendance was with the purpose of having an enjoyable experience and, like many fair and amusement park rides, it shared the features of speed, thrills and excitement. The taxpayer’s appeal against HMRC’s assessment was allowed. (Contact: Andrew Clarke)

Deloitte Tax Transformation Trends 2025

Deloitte’s Tax Transformation Trends 2025 report, based on a survey of 1,000 tax and finance leaders, shows how tax functions are balancing cost and compliance with longer-term business requirements. Tax and finance leaders are focusing on data, compliance cost management, automation, and AI. Compliance with global regulatory changes and talent challenges are the top issues impacting tax operations. The report shows that tax leaders are exploring AI as a solution to some of these challenges, but are proceeding cautiously as the technology continues to evolve. The report’s findings highlight the critical importance of responding to external complexity, and demonstrate the need for organisations to adapt their internal structures and operating models. (Contact: Donna Huggard)

VAT case calendar

On 4 and 5 June, the Supreme Court will hear the taxpayer’s appeal against the Court of Appeal judgment in Hotel La Tour Ltd on the VAT recovery on fundraising share sale costs.