- Joined
- Oct 5, 2019
- Messages
- 2,491
- Reaction score
- 2,380
We've been through this before.
Yes the basic principle is that homebrewing is a "luxury" and so its ingredients are VATable, whereas commercial brewing is "food production" and so its ingredients are VAT exempt. Domestic food production of things like malt loaves is also VAT exempt. But there is a grey area because the same products could be used for all of these.
This happens all the time, and so the taxman comes up with rules of thumb because he needs black and white boundaries, not grey areas, and it's just not cost-effective to have someone making separate adjudications for each and every case - except in the really big ones like the £m's of VAT that depended on whether Jaffa Cakes were cakes or chocolate biscuits.
And in this case the rule of thumb depends on whether it is in retail packaging for homebrew or not. So if Rob sells 10g of coriander for making witbier - that's VATable. But a supermarket can sell 10g of coriander and it's exempt as it's probably going to go into a curry or something. And Andy can buy a 1kg tub of coriander from Rob because that's considered a "commercial" amount even though it will end up in beer.
So my memory from that previous thread is that HMRC had "officially" indicated that their rule of thumb was that a 25kg sack as wholesale and so non-VATable. I guess in theory if there was a high-profile Zadhawi-style case where it was worth their while proving that the Homebrewer McHomebrew collective was contravening the general principle of "homebrewing is VATable" and depriving the Exchequer of £m's then they might dive deeper but for now they seem comfortable with the idea that 25kg = wholesale whereas eg 5x5kg is retail.
But Rob's much closer to this so follow what he says.
Yes the basic principle is that homebrewing is a "luxury" and so its ingredients are VATable, whereas commercial brewing is "food production" and so its ingredients are VAT exempt. Domestic food production of things like malt loaves is also VAT exempt. But there is a grey area because the same products could be used for all of these.
This happens all the time, and so the taxman comes up with rules of thumb because he needs black and white boundaries, not grey areas, and it's just not cost-effective to have someone making separate adjudications for each and every case - except in the really big ones like the £m's of VAT that depended on whether Jaffa Cakes were cakes or chocolate biscuits.
And in this case the rule of thumb depends on whether it is in retail packaging for homebrew or not. So if Rob sells 10g of coriander for making witbier - that's VATable. But a supermarket can sell 10g of coriander and it's exempt as it's probably going to go into a curry or something. And Andy can buy a 1kg tub of coriander from Rob because that's considered a "commercial" amount even though it will end up in beer.
So my memory from that previous thread is that HMRC had "officially" indicated that their rule of thumb was that a 25kg sack as wholesale and so non-VATable. I guess in theory if there was a high-profile Zadhawi-style case where it was worth their while proving that the Homebrewer McHomebrew collective was contravening the general principle of "homebrewing is VATable" and depriving the Exchequer of £m's then they might dive deeper but for now they seem comfortable with the idea that 25kg = wholesale whereas eg 5x5kg is retail.
But Rob's much closer to this so follow what he says.
