Wetherspoons fails to prove cider is not alcohol in tax dispute
Budget boozer Wetherspoons has failed in its bid to argue that cider does not fall within the meaning of ‘alcoholic beverages’ in a VAT dispute with HMRC.
The London-listed pub chain appealed against the rejection of its claim for overpaid value-added tax (VAT) on supplies of cider made from 15 July, 2020, to 31 March, 2022.
Glyn Edwards, VAT director at MHA, said this was over legislation that introduced a temporary five per cent VAT rate, which was later increased to 12.5 per cent for supplies used in catering during the pandemic.
“That legislation excluded ‘alcoholic beverages’ from the reduced rate but defined the meaning of those words quite narrowly: “Beverages chargeable with any duty of excise specifically charged on spirits, beer, wine or made–wine and preparations thereof'”.
“Cider appeared to have been forgotten,” he stated.
Wetherspoons submitted a claim to the taxman for £4.85m in overpaid VAT, which was rejected.
The chain, founded by Sir Tim Martin, took the case to the Fist-Tier Tribunal, which heard it last month, arguing that cider did not fall within the definition of ‘alcoholic beverages’ as defined by legislation.
HMRC told the Tribunal that it would be “anomalous and absurd” for cider to be treated as
falling outside the definition of ‘alcoholic beverage’.
On Wednesday, the Tribunal sided with the tax agency, ruling that HMRC succeeded in relation to their European Union legislation argument.
Edwards said: “The Tribunal agreed that it would strain the wording of the legislation to include cider when it was not mentioned, but it was an obvious oversight by the legislation, and it would be absurd for cider to be treated differently from other alcoholic drinks.”
“Therefore, the Tribunal felt able to correct that defect and to interpret the legislation as if cider had been mentioned,” he added.
However, as Edwards pointed out, it took “three days in court and a 72-page written decision,” for the Tribunal to decide that cider was an alcoholic beverage.
Wetherspoons was contacted for a comment.