VAT & Food supplies… Is it nuts?

A client is a VAT registered specialist food supplier. They supply roasted nuts and this particular customer has asked the client if he can supply the nuts roasted but without the shells on. Does this make any difference to the VAT treatment?

The VAT treatment of food can be very complicated. Although there is the zero rate for food for human consumption, there is a list of exceptions which are chargeable at the standard rate, and there are also exceptions to these exceptions which move the goods back into the zero rate category. The legal reference is VATA 1994, Schedule 8, Group 1.

In this client’s case excepted item 5 is relevant. This lists: “any of the following when packaged for human consumption without further preparation, namely, potato crisps, potato sticks, potato puffs and similar products made from the potato, or from potato flour, or from potato starch, and savoury food products obtained by the swelling of cereals or cereal products; and salted or roasted nuts other than nuts in shell.”

Therefore, the supply of shelled roasted nuts is subject to the standard rate of VAT as an excepted item, whereas roasted nuts in their shells would be zero rated.