JCP Solicitors Welcomes Major Update to HMRC VAT Guidance on Dog Food

JCP Solicitors’ Commercial Litigation team acted for the well-known Welsh manufacturer, Burns Pet Nutrition, in its landmark legal challenge with HMRC regarding VAT on working and assistance dog food.

The case, which has been watched closely by the industry, was settled on appeal in favour of Burns Pet Nutrition. HMRC has since changed its VAT guidance on dog food, which could potentially save animal feed producers, working animal owners and assistance dog charities thousands of pounds.

JCP was approached by Burns Pet Nutrition in 2019 after HMRC challenged the zero rating of its ‘Alert’ and ‘Active’ dog food ranges. The specialist ranges, which were specifically created for working dogs, including sheep dogs and assistance dogs (such as guide dogs and seizure and stroke dogs), had historically been zero-rated due to its tailored nutritional support for working dogs. However, HMRC guidance did not include assistance dogs in its definition of working dogs and, as a result, Burns Pet Nutrition was asked to pay around £2m in VAT for its ‘Alert’ and ‘Active’ ranges, with HMRC claiming that the products had been incorrectly labelled as not subject to VAT.

The basis of the HMRC VAT assessments was that the ‘Alert’ and ‘Active’ ranges were incorrectly zero rated by Burns Pet Nutrition, specifically because, although they are “animal feeding stuffs” within Group 1 of Schedule 8 VAT Act 1994, they fall within excepted item no.6 because they are “pet foods”.

The VAT assessments were disputed by Burns Pet Nutrition and JCP Solicitors submitted a response to HMRC in July 2019 that these ranges were created very specifically for active working and assistance dogs and were actively marketed in this way since (for example) the 'Active’ range would be unsuitable for household pets and could cause health or behavioural issues for more sedentary dogs.

The case was settled on appeal, with HMRC accepting the taxpayer’s case that the food ranges were for active working dogs (such as sheep dogs and rescue dogs) and assistance dogs (such as guide dogs and other disability dogs) and had not been held out for sale as a food for household pets.

HMRC cancelled its request for Burns Pet Nutrition to pay VAT on the range and it has since changed its guidance around dog foods which are zero rated for VAT by adding assistance dogs to its list of categories of working dogs.

Andrew Meech, Director and Joint Head of Commercial Litigation at JCP Solicitors, said: “Of course, we cannot know if our case was a deciding factor in HMRC’s decision to change its guidance on dog food but we are delighted nonetheless and are proud to have played a role in the Burns case, which has ramifications not just for them, but for the animal food industry as a whole. The case was unusual in that initially HMRC had accepted the VAT-free status of these foods and then backtracked. But we are pleased that this much-loved Carmarthenshire firm has had the result it wanted and, of course, the fact that HMRC has now changed its guidance for VAT on foods for working dogs will be of interest to other producers. We are delighted to have worked with John Burns at Burns Pet Nutrition, alongside David Milne KC and Ben Elliott both of Pump Court Tax Chambers, in achieving this outcome.”

On the decision John Burns, the founder of the Burns Pet Nutrition brand, said: “We’d like to thank JCP Solicitors for their invaluable support and guidance during this complex case. From the start, we felt it was absolutely essential to challenge this decision by HMRC as we knew the outcome had the potential to be significant for our industry.

“Thanks to the in-depth knowledge and support of JCP Solicitors we feel we have contributed to changing HMRC’s guidance on VAT-exempt foods. I was always confident that we had followed the guidelines properly. As far as I’m aware, Burns is the only pet food company which produces food specifically for assistance dogs which support millions of people across the UK. The change to the guidance is crucial for businesses like ours, which are committed to investing in similar products. I hope this update and clarification from HMRC marks the end of the matter so we can get back to the business of making quality animal feed for our thousands of customers across the UK.”

JCP Solicitors has Commercial Litigation experts across its offices in Swansea, Cardiff, Caerphilly, Carmarthen, Cowbridge and Pembrokeshire.

Pump Court Tax Chambers, based in London, offer unparalleled Barrister expertise in every facet of revenue law.