Queenscourt Limited: UT Rules Dip Pots in Meal Deals Are Zero-Rated

• The Upper Tribunal (UT) ruled that dip pots supplied as part of a KFC meal deal are a separate zero-rated supply, overturning a previous First-tier Tribunal (FTT) decision that considered them part of a single, standard-rated hot food supply.
• The UT emphasized that, generally, every element in a multi-element transaction should be regarded as distinct and independent for VAT purposes, unless it falls under specific exceptions where all elements constitute a single economic supply.
• This decision means that the dip pots, even when included in a meal deal, should be analyzed independently for VAT liability, leading to a taxpayer win and allowing for the recovery of previously claimed VAT.

Source KPMG

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• Queenscourt won an Upper Tribunal appeal over VAT on dip pots sold in KFC meal deals.
• The UT held the dip pots were separate, zero-rated supplies, not part of a single standard-rated supply with the hot food.
• HMRC had accepted the meal deals were multiple supplies, so the dips had to be treated consistently as separate items.
• The UT rejected the First-tier Tribunal’s mixed approach that treated some meal deal items as composite and others as separate supplies.
• The legitimate expectation argument was not decisive, and the UT left open the jurisdiction issue; the appeal was allowed.

Source: taxscape.deloitte.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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