Tax Compliance
CKH Services specialises in VAT and customs compliance, classification and product or service rulings. Companies launch new products onto the markets a lot faster than Revenue offices can respond and what may seem like the appropriate VAT rate on your product or service may not be correct. A good example of this is in the food and food supplement industry where a number of VAT rates exist depending on how the product is classified.
We represent many major retailers, distributors and manufacturers to HMRC and the Irish Revenue Commissioners and with a combination of taxation, regulatory and scientific knowledge, we are expertly placed to make a product submission on your behalf.
We represent many major retailers, distributors and manufacturers to HMRC and the Irish Revenue Commissioners and with a combination of taxation, regulatory and scientific knowledge, we are expertly placed to make a product submission on your behalf.
VAT Rates on Food and Beverages
The continued increase in the production of new specialty food and drink products over recent years has led to a situation where the VAT treatment of many of these products is no longer as clear cut as it was in the past. For example, we now have a huge array of snack foods that are borderline products between Standard VAT (23%) rated savoury foods and Zero VAT rated conventional foods. The same applies to products that may be regarded by Revenue as confectionery and to liquid products that are borderline between Zero rated food and Standard rated beverages.
The VAT rates applicable to food and drink are fairly straight forward for most types of products. In summary, basic food products qualify for the Zero VAT rate while most drinks are liable to Standard VAT. Bread is Zero VAT while most other baked products are charged at the Reduced rate of 13.5%.
There are numerous exceptions. For example, tea, coffee and milk all qualify for the Zero VAT rate while Standard VAT applies to savoury products, confectionery and chocolate biscuits, as well as to most beverages.
The problems for industry stem from Revenue’s interpretation of what constitutes a savoury product, a confectionery item or a beverage. The two most important tests are how the product is manufactured and how it is held out for sale. The latter test has become increasingly relevant in recent years.
CKH Fiscal Services provides specialist advice in navigating the VAT minefield surrounding many specialty food and drink products. This can involve working with producers on product design or making representations to Revenue in respect of current products. We have staff with many years of experience of working at senior level in Revenue, in the areas of VAT rates for food and drink. Our clients range from small manufacturers to some of the largest food distributors in Ireland today. We have a high success rate in obtaining VAT rulings that reflect the true nature of the products we represent and many of our clients are happy to confirm this success.
The VAT rates applicable to food and drink are fairly straight forward for most types of products. In summary, basic food products qualify for the Zero VAT rate while most drinks are liable to Standard VAT. Bread is Zero VAT while most other baked products are charged at the Reduced rate of 13.5%.
There are numerous exceptions. For example, tea, coffee and milk all qualify for the Zero VAT rate while Standard VAT applies to savoury products, confectionery and chocolate biscuits, as well as to most beverages.
The problems for industry stem from Revenue’s interpretation of what constitutes a savoury product, a confectionery item or a beverage. The two most important tests are how the product is manufactured and how it is held out for sale. The latter test has become increasingly relevant in recent years.
CKH Fiscal Services provides specialist advice in navigating the VAT minefield surrounding many specialty food and drink products. This can involve working with producers on product design or making representations to Revenue in respect of current products. We have staff with many years of experience of working at senior level in Revenue, in the areas of VAT rates for food and drink. Our clients range from small manufacturers to some of the largest food distributors in Ireland today. We have a high success rate in obtaining VAT rulings that reflect the true nature of the products we represent and many of our clients are happy to confirm this success.
VAT Rates on Food Supplements
eBrief 70/11 issued by the Irish Revenue Commissioners changed the landscape for food supplement VAT classification in Ireland. Before this was issued, food supplements were supplied at the zero VAT rate. eBrief 70/11 brought in specific rules as to what food supplements could be supplied at the zero VAT rate and many food supplements became automatically liable to the standard rate of VAT.
While this issue has finally been resolved with the introduction of the reduced rate of VAT at 13.5% on food supplements, legacy issues remain and Revenue officials may still pursue traders that did not apply the Standard rate of VAT on food supplements. CKH Fiscal Services has a wealth of regulatory, legislative and scientific knowledge that places us as the leading experts in this area. Our clients range from small food supplement manufacturers to global retailers and distributors.
In the UK, where all food supplements in capsule format are liable to the standard rate of VAT, we have the opposite situation from Ireland, where many retailers and distributors apply VAT to ALL food supplements regardless of their format. With the expertise in the industry to CKH have, we can advise which products should be zero rated, and where applicable, submit a case to HMRC for borderline products to obtain a zero rate ruling.
While this issue has finally been resolved with the introduction of the reduced rate of VAT at 13.5% on food supplements, legacy issues remain and Revenue officials may still pursue traders that did not apply the Standard rate of VAT on food supplements. CKH Fiscal Services has a wealth of regulatory, legislative and scientific knowledge that places us as the leading experts in this area. Our clients range from small food supplement manufacturers to global retailers and distributors.
In the UK, where all food supplements in capsule format are liable to the standard rate of VAT, we have the opposite situation from Ireland, where many retailers and distributors apply VAT to ALL food supplements regardless of their format. With the expertise in the industry to CKH have, we can advise which products should be zero rated, and where applicable, submit a case to HMRC for borderline products to obtain a zero rate ruling.
VAT Reviews
VAT is a self-assessment tax. This means it is up to the taxpayer to choose the correct VAT rate to charge on their product or service. Charging the incorrect VAT rate can lead to a myriad of problems from penalties and interest in the event of a Revenue audit to cash flow difficulties if you are overcharging VAT.
CKH Fiscal Services are experts at ensuring the correct Vat rates are being charged. We have completed many mini audits for companies, large and small. It is up to the retailer to decide the appropriate VAT rate and Revenue auditors will not accept a supplier’s VAT rate as evidence that the retailer was charging the correct rate. CKH Fiscal Services will always advise to obtain a Revenue determination where any product is borderline.
CKH Fiscal Services can help businesses prepare in advance of a VAT audit. This may include a review of your records to confirm everything is in order, or preparation of a disclosure to Revenue before the audit begins. We can also deal with Revenue auditors on your behalf. Our aim is to minimise your exposure and reduce any potential liability.
For further information, call Kevin Hurley on 01 8600 444
CKH Fiscal Services are experts at ensuring the correct Vat rates are being charged. We have completed many mini audits for companies, large and small. It is up to the retailer to decide the appropriate VAT rate and Revenue auditors will not accept a supplier’s VAT rate as evidence that the retailer was charging the correct rate. CKH Fiscal Services will always advise to obtain a Revenue determination where any product is borderline.
CKH Fiscal Services can help businesses prepare in advance of a VAT audit. This may include a review of your records to confirm everything is in order, or preparation of a disclosure to Revenue before the audit begins. We can also deal with Revenue auditors on your behalf. Our aim is to minimise your exposure and reduce any potential liability.
For further information, call Kevin Hurley on 01 8600 444