TC09646 - [2025] UKFTT 01123 (TC)

There are very many cases which consider the application of Group 1 Schedule 8 VATA. As identified by HMRC there are 20 which look at the question of whether a product is food of a kind used for human consumption. The rest of the plethora of cases concern the correct interpretation of the exceptions and overrides.

Whilst Ferrero and P&G concern the exceptions, we accept them as providing a framework of approach which requires us to stand in the shoes of an informed consumer and ask: is N2O “food”? That is the limit of our task because Item 1 does not apply to everything which is used for human consumption it applies to food of a kind used for human consumption. There is no question that the Chargers contain N2O of a kind used for human consumption. But is it food?

We are required to interpret the meaning of Item 1 so as to ensure that the intent of Parliament is met. Parliament chose to use a common word in regular and ordinary use. A dictionary definition can often be a useful starting point when interpreting ordinary words but for one as oft used as food it may be of less utility (as appears to have been the position taken in some of the cases to which we were referred). Nevertheless we note that the Oxford English Dictionary defines food within the context of the phrase “of a kind used for human consumption” as “any nutritious substance that people eat of drink in order to maintain life and growth”. We consider that definition to reflect what an ordinary and informed person would consider to be “food” particularly that food will be eaten or drunk.

We consider that the factors which other Tribunals have considered (and relied upon by HMRC) are helpful in determining whether products on the margin should properly be treated as food for the purposes of Item 1. However, where a product bears none of the hallmarks of food in a general or ordinary sense the range of factors which might tip the balance one way or the other will, in our view, be of less relevance.

As accepted by both Mr Tallon and Professor Niranjan, N2O, once removed from the Charger, and therefore available for “consumption” in the widest sense, is a gas. It is therefore incapable of being either eaten or drunk indicating that it is not a food.

Further, it is colourless, odourless, and tasteless. Whilst we accept that these factors on their own cannot be determinative as the same could be said for water, we do consider it significant that N2O, in gas form and in the quantity contained in the Chargers is imperceptible once released from the Chargers.

By reference to the meaning we consider an ordinary informed person would apply when considering whether something used for human consumption is “food” we consider that whether it is nutritious is a relevant consideration. We distinguish “nutritious” from having “nutritional value” if, and to the extent that, “nutritional value” bears the meaning used by Mr Tallon and Professor Niranjan. This is because, in our view, not all substances which would be considered as food provide the body with energy in the form of carbohydrate (including sugar), fat, protein or fibre. Water is the paradigm example. It is nutritious in the sense that it is consumed to maintain life.

Having reviewed the cases to which we were referred we consider that the Tribunals before us, whilst using the term “nutritional value”, have used it in the wider sense we adopt as nutritious, and not the narrower sense used by Mr Tallon see in particular Bottled Science Limited v HMRC [2024] UKFTT 00592 (TC) where the Tribunal references nutritional value in the context of proteins, carbohydrates, fats and minerals. On that basis we agree with that Tribunal that although the bar will be low a substance which provides a small amount of nutrition (in the widest sense) will be nutritious and get over the first hurdle. We also agree that a substance which does not contribute in any way to maintaining life or growth is most unlikely to be a food.

On the basis of our factual finding at paragraph 37 above we consider that the N2O in the Chargers is not nutritious. Except by accident it does not provide and is not intended to provide the body with N2O.

However, some substances, even those which are not nutritious and/or those with limited nutritional value and which are used for purposes other than to provide any nutrition (or nutritional value) will be zero rated where they are an ingredient to food production. That will be so where, an overall assessment of the facts from the perspective of an informed person, justifies a conclusion that the ingredient in question is food, and this is demonstrated in the case of Phoenix. That case concerned the supply of bicarbonate of soda meeting the standards required for use in food and packaged for sale in supermarkets.

Relevant to this appeal, that Tribunal made the following observations and determinations:

In that context as bicarbonate of soda was an essential ingredient in some bread and cakes critical to the taste and texture of those foods, it was not “cosmetic” in the sense that it was a preservative or colouring. As it was sold as a baking ingredient for sale in supermarkets or retail grocers, its intended market was as a food ingredient to be used as leavening and not for any contribution to nutritional value (in the widest sense discussed above as it provides no ”energy”). Whilst its purpose in culinary use was different it was similar to salt in terms of its essential characteristics as a food ingredient and, like salt packaged and sold for culinary use, was properly zero rated.

An example of an ingredient not considered to represent food on an overall assessment of the facts is carbon dioxide used in the production of beer to form its head as demonstrated in G&CL. The Tribunal in that case found as a fact that the gases were food grade and were supplied to public houses for used when beer was dispensed through a tap to produce a head (it was not used as a propellant) and that once the beer was served the gases would dissipate. The gases affected the aroma of the beer by delaying the customers experience of it until the beer was consumed.

Counsel for the taxpayer in that case contended that the gases became an essential constituent of the beer particularly the head and therefore zero rated.

The Tribunal concluded that the gases were not zero rated as they were not food of a kind used for human consumption. It concluded that no relevant informed and broad-minded individual considering whether the gases were food would conclude that they were.

We have carefully considered the facts as we have found them. We remind ourselves that we do not need to put the factors which may point one way on one side of the pan scales or the other and see which way it tips. What we must do is assess them in the round from the perspective of an informed person and ask whether N2O is food.

We conclude that it is not. It is a gas which has been compressed into the Charger for a very specific culinary use (whipping or aerating cream or other food substances containing fat in combination with a Cream Whipper). By reference to the evidence of Mr Tallon, and the relevant parts of Professor Niranjan’s letter, the N2O is a food grade additive which is fat soluble thereby making it a suitable substance, when used with the Cream Whipper to add volume to foods containing fat. This is achieved through a combination of propulsion through a nozzle and vaporisation of the liquid N2O, which has been dissolved into the fat contained within a ready to eat food, into gas. The cream/other food is not changed by the N2O as such, only the form in which the cream/other food is consumed is altered.

Whilst we are clear that the cases of Phoenix and G&CL provide only illustrations of situations in which previous Tribunals have had to grapple with a similar problems, we consider N2O to be materially dissimilar to bicarbonate of soda and more similar to the gasses considered in GC&L. Bicarbonate of soda is added as a leavening ingredient. As such it alters the ingredients with which it is combined to produce a different food product of which it is part. In contrast, the gases supplied to be added to beer to create its head and did not change the beer itself.

We acknowledge that the N2O is food grade and recognised and regulated as a food additive. However, food grading and E number regulation are focussed on the safety of substances offered for human consumption they do not determine that they are in and of themselves food for the purposes of assessing whether VAT is due. The two schemes of legislation form different purposes. Similarly a Halal rating indicates only that products intended for use by Muslims meet Islamic laws, they do not designate a substance as a food for VAT purposes.

For these reasons we consider that N2O is not a food and accordingly, the supply of Chargers containing the N2O are properly standard rates.

As a note, and for Mr Parr’s benefit, we add that had he produced evidence to show that other sized cannisters of N2O were supplied and/or that they were used for beverages, that would not have made a difference to our decision.

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.