Tonic Attack Wheatgrass and Broccoli Sprout Juice

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Posted by oliver

Résumé of the VAT tribunal seeking to impose VAT on wheatgrass juice

This is a résumé of the VAT case between Ocean Grown Ltd and HM Revenue and Customs (HMRC). This is compiled by me, Oliver Dowding, the appellant. Whilst Ocean Grown Ltd., were officially considered to be the appellant, this was because Tonic Attack Ltd. was not at the time VAT registered. All subsequent references to Tonic Attack Ltd. in this article should be taken to understand that HMRC were in fact dealing with Tonic Attack Ltd. (TA), by referring to them through Ocean Grown Ltd.

The basis of the case upon which the Tribunal was asked to adjudicate, centred on whether wheatgrass juice could be considered to be food or drink.

In May 2005 I was in conversation with the HMRC VAT unit to establish if the wheatgrass juice being produced by TA would be subject to VAT.  I was verbally told no, and recorded that outcome in the business daybook.  This seemed a totally logical decision as wheatgrass juice is surely a food, albeit that it is the juice extracted from wheatgrass, but which grass is the core part of the diet for tens of millions of animals roaming the planet, and which keeps those same animals, huge and small ones alike, healthy and fit.

However, a while later TA received a letter saying that HMRC had since re-thought this issue and that they considered wheatgrass juice to be a drink, and as such it would be levied with VAT.  A lengthy series of letters bounced back and forth.  The end result, after much correspondence was that TA felt compromised and that the only solution was to go to a VAT Tribunal and prove the point. 

TA was faced with a dilemma. Either I could cave in and accept that I have to add VAT to the price of my juice, and, because of this, so would everybody else selling wheatgrass juice, anywhere in the UK, and perhaps by extension that may come to apply to anyone in the EU.  Alternatively, I could opt to stand up and fight. However, to do the fighting option would mean doing it alone, and bearing all the cost which would be of benefit to everybody as well as TA.

I could not bear the thought of HMRC getting away with such blatant highway robbery, and imposing a tax on completely false grounds. Therefore, I concluded that the only solution was to go to a Tribunal. Thus, some 30 months after the initial phone call TA assembled its case, using necessary and expensive legal assistance.  The Tribunal sat in November 2007, and the case lasted two days. 

During the process I did ask a number of other wheatgrass sellers if they would contribute to the costs, as the benefits were clearly going to favour them too.  Most didn't even bother to reply, and none offered a penny.  You can make your own mind up as to who is the fairest wheatgrass  juice supplier in this business!  I thought it disappointing, at best.

The central part of TA's evidence was that the nutritional composition of wheatgrass juice, particularly the quantity of protein, was such that it could only be considered to be food. Previous cases brought against drinks manufacturers who were trying to prove that their product was a food, had often sought to show that the liquid "slaked the thirst". The case was made by HMRC to the Tribunal but rebutted by TA as it would be highly unlikely for somebody who was thirsty to pick up a glass of wheatgrass juice and drink it to satisfy that thirst.

Tonic Attack wins!  TA 1: HMRC 0

Just over 2 months later the judge gave her verdict which was in TA's favour!  She allowed HMRC time to consider appealing but HMRC concluded that they would not do so.  They hadn't a leg to stand on. TA was pleased that some common sense at last seemed to have been shown.  Furthermore, the judge awarded costs to TA. This seemed the only logical outcome, and I was happy with this.

  • TA had not asked to be taken to the Tribunal.
  • TA had never doubted whether wheatgrass juice was food.
  • HMRC had instigated the whole case, not proven their case, and lost.
  • Therefore, it seemed perfectly reasonable that they should pick up the entire cost of the proceedings.

During the run-up to the Tribunal hearing, I had concluded I needed to suspend the production business in order not to run up potential liability to VAT on ongoing sales, which I could not financially withstand.  Thus the case effectively closed my new venture down, and disappointed a loyal and hard-won customer base, many of whom depended on wheatgrass juice arriving weekly to sustain their health, or restore it.

Following the case, as the judge had given me leave to claim my costs, I set about developing the claim. As a small business, sustaining a large bill was unrealistic. I only took the case to protect the logical situation to be enshrined in law, and that there were many others who would have been with me in this situation – but none of whom were ever asked to support my case.  I wanted to include a link to the result here, but sadly despite extensive searches it seems to have now been removed from the HMRC website!

Complaint To The Treasury Over HMRC Behaviour

I duly assembled my claim for costs.  HMRC delegated the task of minimising my claim as much as possible to “recovery agents”, who they appointed immediately after the tribunal result was declared. This part of the saga dragged on for a further 18 months beyond the date of the Tribunal hearing. The agents had been instructed by the HMRC case officer on what they would accept.  This figure started at a very low number, totally unrealistic, and seemingly plucked from the air. Since that time, it climbed bit by bit, and finally we ended up at about 70% of the total.  This was after we had endured two meetings in the Supreme Court Costs Office, and just ahead of a possible full Court Case.  Whilst this seems morally and logically wrong, there was no way out, other than to accept. Going to a full Court Case could have resulted in losing a large part of what is already being hard-won.

So, 4 years after the initial phone call, and which was less than a year after I began the venture, I had a verdict. Justice had been done, but at a huge cost to TA, while other wheatgrass juice suppliers gained loads of benefit at nil cost to themselves. It wasn't a foregone conclusion as has been shown since, when Innocent lost a case claiming smoothies should be VAT-free.  Smoothies now carry 17.5% VAT!! Meanwhile, TA wheatgrass and broccoli sprout nutritional juices are VAT free.

I made a complaint to the Treasury about the performance of HMRC, pointing out that they will perhaps write back and offer me sympathy. At the same time I anticipated that they will assure me that due and fair process has been followed. They did and pushed me to one side.   

However, all was not lost! Shortly after the result, an opportunity was presented to replace my juice with some which is produced in Ireland. So, I now sell sachets containing 33ml, and best of all with a shelf-life of over 2 months. These sachets come in units of 7 to make a week’s supply. You can order 7, 14 or 28 sachets, or, as many now do, larger quantities in bulk. All is made easy as this doesn’t need to be kept chilled. The flat-pack nature of the box means that it will readily fit through any letterbox. The means by which the shelf-life is generated, is through pressurised packing. This ensures that every drop of air is expelled from the tube, which itself has been filled with fresh juice, as it is squeezed, and therefore the juice is preserved in a stable state.

Added to this, I also have broccoli sprout juice! The 5-day old sprouts, grown and fed just like the wheatgrass with nutrient rich ocean solution are juiced and packed in the same way.  They are very different juices, and the broccoli sprout juice has much great research building to support its efficacy with such as pollutant removal (detox) as in China, with autistic children, and with some cancers. For the latter we can make no direct claims, although are well aware there is a company spending at least £20million to produce a pill containing sulforaphane and then market that to the NHS at huge cost – for treating cancer.  

There is plenty more to be read about the juices on Tonic Aattack's website and of course you can order the wonderful juices there!