Weekly VAT News

Minerva Research Labs Limited: Collagen drink products were not food – FTT

Minerva Research Labs Limited sold a range of collagen-based products targeted at the health of skin, hair, and joints and muscles. Minerva made a claim for overpaid output tax on the basis that their products should be zero-rated as food. The First-tier Tribunal has ruled that, for VAT purposes, the products were not food. It was common ground that the FTT was required to carry out a multi-factorial assessment to determine whether zero-rating applied. In determining that the products were not food, the FTT placed significant weight on the following: how the products were held out for sale (as “liquid beauty products”); that they were purchased for cosmetic and anti-ageing reasons; that they were not marketed to be eaten instead of a meal, or even as a snack; use of the words “dose” and “treatment” on marketing and packaging; and that the products were labelled with “precautions” or “warnings”. The FTT refused Minerva’s appeal. The FTT noted that they were not guided by the FTT decision in Bottled Science (also concerning collagen-based drinks, currently on appeal to the Upper Tribunal), given the differences in fact, but that the decision in that case was consistent with the conclusion which they had reached. (Contact: Donna Baker)

CBAM update

The UK Carbon Border Adjustment Mechanism (CBAM), which will place a carbon price on specified goods imported into the UK, will come into effect on 1 January 2027. Following the regulations made and guidance issued in July, the government has now made further regulations to implement CBAM. The Carbon Border Adjustment Mechanism (Emissions and Verification) Regulations 2026 set out the calculation of embodied emissions and provisions for determining, evidencing, and verifying emissions. Also, HMRC have advised that the primary CBAM legislation inadvertently included certain ferro-silicon goods within the scope of CBAM, and that this drafting error will be corrected as soon as possible to reflect the policy intention that all ferro-silicon goods are excluded from the scope of CBAM. (Contact: Zoe Hawes)

OECD annual report on tax policy reforms

The OECD has published its annual report on Tax Policy Reforms. The report compares tax reforms introduced and announced in 2025 across 92 jurisdictions. It highlights how tax policy choices have diverged across countries, “reflecting significant differences in domestic conditions, fiscal space and policy priorities”. From a VAT perspective, some of the most significant reforms responded to the digitalisation of the economy, including requiring non-resident suppliers and online platforms to register for and collect VAT on cross-border supplies of digital services and low-value goods. Increases in health-related taxes are one of the most common tax reform measures in recent years, particularly taxes on tobacco, including new tobacco and nicotine products. With respect to environmental taxes, a number of countries increased carbon tax rates or coverage, while others reduced taxes on fuel and electricity in response to cost of living concerns.