Telamara Limited v The Commissioners for HMRC [2025] UKFTT 1123 (TC)

[2025] UKFTT 01123 (TC)Case No TC09646
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 8 –9 September 2025Date Judgment date: 16 October 2025
Taylor House - hybrid
Appeal reference: TC/2022/02128
VALUE ADDED TAX – zero rating – whether nitrous oxide for culinary use is food of a kind for human consumption – no – appeal dismissed
Before
TRIBUNAL JUDGE AMANDA BROWN KCNASREEN HUSSAIN
Between
TELAMARA LIMITEDAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentMr Parr, former director of the Appellant for AppellantMs Rajkiran Arhestey of counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs for RespondentsDECISION

Introduction

[1]This appeal concerns assessments issued to Telamara Limited (Appellant) by HM Revenue & Customs (HMRC) pursuant to section 73 Value Added Taxes Act 1994 (VATA) on 9 February 2022 (Assessments). The Assessments seek to recover output tax HMRC contend to have been under declared for VAT prescribed accounting periods 02/20 to 05/21 in connection with the supply of nitrous oxide (N2O) for culinary use; in particular, and as HMRC understood it, 8g canisters for use exclusively as cream chargers (Chargers)which HMRC consider should properly have been standard rated but had been treated as zero rated by the Appellant. The total sum assessed (following review) is £1,477,581.86.[2]Prior to the hearing, the Appellant’s challenge to the Assessments was not entirely clear. By its correspondence, the grounds of appeal and Mr Parr’s witness statement the focus of the Appellant’s discontent with the Assessments was that he felt they were unfairly raised. This was because when the business was established the Appellant had been unclear as to the liability to be applied to supplies of the Chargers. HMRC had been contacted on two separate occasions and on each had referred the Appellant to public guidance on the liability of food products and had otherwise been unable to assist the Appellant with determining the liability of the Chargers. Mr Parr asserted that HMRC had allowed the Appellant to mis-declare the VAT only subsequently to then seek to recover it. Mr Parr challenged how HMRC could have been so uncertain when he asked them when he went into business supplying the Chargers and yet now so certain that the supplies were standard rated.[3]As we explained to Mr Parr, our jurisdiction is limited to determining the liability of the Chargers by reference to the evidence available to us and applying the provisions of Item 1 Group 1 Schedule 8 VATA (Item 1)as considered and explained in the case law. We do not therefore recite or address any of Mr Parr’s submissions as to fairness. However, we note that Mr Parr accepted that HMRC never told him the Chargers were properly zero rated.[4]Mr Parr does not challenge the calculation or quantum of the Assessments if the Chargers should properly be standard rated.[5]For the reasons set out below we find that the Chargers are standard rated, and we dismiss the appeal.

Evidence and findings of fact

[6]We were provided with a bundle of documents consisting of 320 pages, a supplementary bundle of 152 pages, a short witness statement from Mr Parr and an expert witness statement from Mr Mark Tallon with a pack of supporting materials of 1707 pages.

Documentary evidence

[7]The principal documentary evidence on which we rely from within the bundles is:(1) Copy invoices issued by the Appellant all of which described the goods supplied as “Dairy products misc. cream/beverage infusers 600 x 8g cylinder”. There was one such invoice dated 11 Augst 2021 attached to his witness statement and further invoices had been provided to HMRC for March and April 2021. These latter invoices were consecutively numbered from invoice number 77683 to 77788. The recipients of the supplies, as shown on the invoices, were predominantly limited companies, the names of most indicated that they were either wholesalers or catering companies. Some invoices were addressed to named individuals.(2) Packaging for 8g Mosa ultra 8g Chargers. The packaging states that the Chargers are N2O Food Grade E942. They are not for medical use. It promotes them “For use with food in limited quantity” and “for whipping cream with a Cream Whipper only”. The maximum quantity for the Cream Whipper is stated to be 8g for 500m/0.5L cream. The instructions for use state:
“Before use carefully read the instruction manuals of the pressure regulator and the Cream Whipper. Carefully screw the pressure regulator onto the top of the secured cylinder in a straight up position (do not cross thread) and tighten by hand. Use the special adapter to connect the pressure regulator with the Cream Whipper. …”
Use the special adapter to connect the pressure regulator with the Cream Whipper. …” (3) Pictures of the Chargers as provided from information shown on the website for Mosa Industrial Corp. These indicate that the Chargers are made of metal and are torpedo shaped with one rounded end and a short tapered narrow end which we understand was attached to the pressure regulator. (4) The Mosa International Corp website appears to provide some suggested recipes using N2O; however, the recipes were not specific as to whether all, or indeed any, were produced using the Chargers or other N2O products. It was apparent from the further website material that Mosa International supply compressed gas of various sorts for use in various settings and not only culinary gasses. (5) Again from the Mosa International Corp website, a picture of what we understand to be the Cream Whipper. The Cream Whipper looks similar to an insulated drinking bottle and shows a maximum capacity of 0.75l. Attached to the top of the bottle is a nozzle and leaver and a regulator into which we understand the Chargers were screwed. Other pictures showed that the Cream Whipper was used inverted to extrude or inject the contents through a range of nozzles.[8]Included in the bundle were documents concerning a product called the “infuso stream”. This product also uses a N2O canister, and the product information described this product as a beverage infusion machine which used the properties of N2O to create delicately infused waters wines, vinegars, oils, spirits, mocktails and cocktails. The N2O canister used in this product appeared to be very significantly larger than the Chargers.[9]We were also provided with a letter prepared by Professor Keshavan Niranjan of University of Reading dated 28 January 2022. In a decision dated 8 March 2024 Judge Anne Redston determined that letter was not an expert report meeting the requirements of Part 35 Civil Procedure Rules and could not be relied upon as such. Directions were made on 8 March 2024 for the parties to agree instructions for expert witnesses and each of HMRC and the Appellants were granted permission to appoint experts and for the reports of such experts to be admitted in evidence. In a second judgment dated 31 May 2024 Judge Redston made further directions concerning the draft instructions to experts, making amendments to the draft. She directed that the Appellant could use the instructions to instruct an expert, be that Professor Niranjan or otherwise. The Appellant did not serve an expert witness statement.[10]HMRC applied for the letter of 28 January 2022 to be removed from the bundle and, in the alternative, objected to any reliance being placed on it. We refused the application to exclude the letter. We considered that the Appellant was entitled to refer to it in the same way as it might to any other correspondence and we would place such weight, if any, on it as we considered appropriate when evaluating the evidence as a whole. In this regard, we note that in his closing Mr Parr indicated that he did not consider Professor Naranjan’s opinion to be materially different to that expressed by Mr Tallon. Accordingly, we take the view that to the extent that the opinions are consistent it is appropriate to rely on both; however, where they differ no reliance should be placed on that of Professor Niranjan. We identify in our discussion of Mr Tallon’s evidence where it is corroborated by Professor Niranjan.

Witness testimony

[11]Mr Parr and Mr Tallon both gave sworn evidence and were cross examined.

Mr Parr

[12]In his witness statement, and by reference to his oral evidence, Mr Parr explained his understanding that the Chargers were intended exclusively for culinary use and their use was not limited to whipping cream but also to make foams, mousses etc and to infuse liquids. He believed the N2O dispensed to have nutritional value because of the traces of other elements that might be present and because, as a gas which formed a component of air, it sustains human life[13]He claimed that the Appellant sold a wide range of N2O products and not simply the Chargers, with differing but all culinary uses. He contended that the larger canisters (like those used in the infuso stream) were for use in beverages with the smaller ones more usually used for food.[14]Supported by a certificate Mr Parr explained that the Chargers were certified as Halal products.[15]It was accepted that the N2O would not be “eaten on its own” but it nevertheless was said to form an ingredient of all of the food substances into which it was incorporated by infusion or by use of the Cream Whipper, changing the state and nature of those foods.[16]In cross examination Mr Parr accepted that the Chargers were not, as far as he was aware, sold in the main large supermarkets. The Appellant’s customers were generally caterers, catering establishments, or other wholesalers. The Appellant did not supply end consumers. However, he believed, and asserted, that corner shops and off licences stocked and sold the Chargers.[17]He also accepted that a Cream Whipper would retail at over £20, he did not accept that they may cost as must as £100 as put to him by Ms Arhestey.

Mr Tallon

[18]Mr Tallon’s report runs to 42 pages including appendices and was accompanied by a bundle of supporting material and literature of 1707 pages. He is a chartered scientist and registered nutritionist with a particular specialism on food law. We accept that his experience qualifies him as an expert in the matters to which his evidence relates.[19]His instructions required him to answer 9 questions. His report and oral evidence provided a high-level answer to each and then a detailed explanation as to how the answer was reached.[20]During the course of Mr Parr’s cross examination of Mr Tallon, at various points, Mr Parr sought to challenge the inadequacy of Mr Tallon’s instructions and thereby the scope of his evidence. As Mr Parr has been given an opportunity to review and agree Mr Tallon’s instructions, and on the basis that those instructions had been considered and amended by the Tribunal, we informed Mr Parr that such challenge was inappropriate.[21]We summarise Mr Tallon’s evidence as follows:(1) Under food law, a food is defined as “a substance or product, whether processed, partially processed or unprocessed, intended to be reasonably expected to be ingested by humans” (Article 2 of Regulation 178/2002). Food is defined to include drink and substances including water intentionally incorporated into the food during its manufacture preparation or treatment. An ingredient is defined to include any substance or product including food additives and any constituent of a compound ingredient used in the manufacture or preparation of food and still present in the finished product even if in an altered form (Article 2(f) Regulation 1169/2011). Food additive means “a substance not normally consumed as food in itself and not normally used as a characteristic ingredient of food, the intentional addition of which for the purposes of manufacture, processing, preparation, treatment, packaging, storage or transport may be reasonably expected to result in it or its byproducts becoming directly or indirectly component of such foods” (Article 3(2)(a) of Regulation 1333/2008).(2) N2O is regulated as a Group 1 substance under Regulation 1333/2008) and identified as E942. So identified, its use is not limited such that there is no requirement to set a dose amount.(3) N2O has the function of a processing aid under the same regulation as it acts as a foaming agent (defined as a substance which makes it possible to form a homogenous dispersion of a gaseous phase in a liquid or solid foodstuff – item 5 Annex 1 to regulation 133/2008) and/or propellant (defined as gases other than air which expel foodstuff from the container).(4) The Chargers contain liquid N2O, and their intended use is in conjunction with a Cream Whipper for the purposes of whipping cream.(5) He explains how the Cream Whipper and the Charges work together. In essence, the cream (which may be liquid cream or, in his understanding, more commonly cream power and water) is inserted into the main container of the Cream Whipper and sealed. The Charger is connected and the liquid N2O is released into the container with the cream. The N2O and cream are shaken together. As N2O is soluble in fat it is dissolved into the cream whilst under pressure within the container. The Cream Whipper is inverted and by releasing the lever on the nozzle the cream/N2O solution is propelled through the nozzle by the change in pressure as the liquid N2O changes to gas N2O. As the liquid N2O was dissolved into the fat in the cream the gas forms bubbles in the structure of the cream creating a foam/whipped texture to the cream. The expansion of the liquid state cream to foam (or whipped cream) is known as “overrun”. The expansion is 300-500%.(6) Cream which is whipped in this way is more unstable that cream whipped mechanically. Both means introduce gas into the cream. Mechanical whipping introduces air. The N2O bubbles introduced through use of the Cream Whipper will diffuse, smaller bubbles (where pressure is higher) with coalesce to form larger bubbles which will eventually pop and as this happens the whipped cream will collapse. This collapse occurs at a must faster rate with cream whipped with N2O using the Cream Whipper than cream whipped mechanically.(7) The different means of whipping cream produce cream with different mouth feel. Mechanically whipped cream being more solid or less light, than the N2O whipped cream. Both products (if from the same cream source) would taste the same.(8) Cream whipped with the Cream Whipper would, in Mr Tallon’s estimation, return to its liquid state in approximately 30 mins but the rate of collapse would depend on a range of factors including temperature (including for instance whether the cream was whipped onto a hot substance, i.e. hot chocolate, or a cold substance, i.e. frozen drinks); the fat content of the cream itself (double cream has a higher fat content than whipping cream or single cream); the use of emulsifiers or other additives intended to affect the stability of the whipped cream.(9) There was no literature or other evidence which determined how much, if any, N2O is ingested by someone consuming the cream with the Cream Whipper and the Chargers. He undertook some reasoned estimation which concluded that the maximum amount which could be ingested in a 150ml portion of cream whipped with the Cream Whipper was 0.79g. This was based on assumptions which were unlikely to hold entirely true such that 0.79g was highly unlikely to represent the amount ingested and the figure would be smaller. For instance 0.79g assumed that all 8g was used in whipping 500ml of cream (i.e. none was left in the main cream container), that none dissipated prior to consumption of the whipped cream and that as the act of consumption took place all the N2O was ingested (i.e. taken into the stomach) rather than being breathed in whilst in the mouth through chewing.(10) Mr Tallon also explained how N2O is used and eliminated by the body. Whilst it is less relevant to the issues we have to decide, we understand that where N2O enters the blood stream through intestinal absorption or inhalation it will be eliminated through exhalation though some may be used to produce amino acids and excreted through urine or sweat.(11) When used for medical purposes, in significantly larger quantities, it may be used as an anaesthetic.(12) In food science and food law “nutritional value” is a defined concept measuring whether the food substance under consideration contains energy (calories) in the form of fat, protein, carbohydrate, fibre, or sugar. In this sense N2O had no nutritional content.(13) Mr Tallon considered the N2O, which he dispensed into a bag and inhaled (contrary to the product’s instructions) to be colourless, tasteless, and odourless though he accepted that certainly odour and taste might be experienced differently by different people.(14) In terms of cost the use of the Cream Whipper (requiring up-front investment), the Chargers and then the cream ingredients represented a more expensive means of delivering the retail consumption of whipped cream than, for instance, purchasing a can of instant whipped cream.[22]Professor Naranjan’s letter reflects Mr Tallon’s evidence in the following regards:(1) Concerning the definition of food and additive under food regulation.(2) N2O does not add to the calories of food.(3) N2O is odourless, colourless, and tasteless.(4) When N2O is used in comparison to air in order to whip cream the whipped cream it produces has a higher proportion of bubbles which are larger in size rendering it more unstable dissipating quickly after whipping and thereby reducing the presence of the N2O in the whipped cream as time passes before consumption.(5) N2O is highly soluble in cream.(6) When used in the Cream Whipper the N2O acts as both a propellant and develops the structure, texture, and mouthfeel of the whipped cream (i.e. is a foaming agent).

Burden of proof

[23]In this appeal the Appellant must show, on the balance of probabilities, that the supplies of the Chargers are properly zero rated.

Findings of fact

[24]By reference to the invoices we find that the Appellant only supplied the Chargers and did not NO2 canisters of other sizes. We do so on the basis that:(1) All the invoices show 8g Chargers as the goods supplied.(2) The infuso stream documentation was referred to in his witness statement to support his assertion that N2O has multiple uses in the food industry and as an additive for food or for a mixture for food stuff. His statement does not contend that the canisters referenced for use in the infuso stream machine were supplied by the Appellant.(3) Further, at no point in correspondence did the Appellant contend that it supplied anything other than the Chargers.[25]In consequence we do not place any weight on the information provided about or uses of the infuse stream N2O cannisters.[26]The Appellant’s customers were not retail customers. The units in which the Chargers were sold were boxes of 600 chargers, each capable of whipping 500ml of cream, such that each box would have facilitated the whipping of 300 litres of cream. In respect of the customers that were shown as named individuals the customers in question were buying 45 – 90 boxes of 600 Chargers and spending €7,000 - €14,000 on those purchases. These named individuals were not, in our view, retail customers.[27]It is accepted that the Chargers are not sold in supermarkets. We do not accept the bold and assertion of Mr Parr that the Chargers are sold by corner shops and off-licences. He did not seek to establish that any of his customers ran such establishments or otherwise evidence the assertion he made. We therefore find it more likely that the Chargers are specialist equipment which may be used domestically but are largely used for catering.[28]We accept that there is an up-front cost of buying a Cream Whipper which exceeds £20. However, whether that renders, over time, cream whipped by the Cream Whipper more or less expensive that purchase of canned instant whipped cream (squirty cream) would depend on the volume of whipped cream used. Eventually the marginal cost of a portion of cream whipped using the Cream Whipper and the Charger may be lower than buying squirty cream.[29]We have no evidence other than Mr Parr’s unsupported assertion that the Chargers contain trace elements, and we find that it is more likely that they contain only N2O.[30]The Chargers are for use with a Cream Whipper. As such they are intended for culinary use and principally for use in whipping cream. The only evidence we were provided with which might indicate the Chargers might be used for beverages was in the description on the invoices. However, we prefer the evidence on the packaging which states that the Chargers are to be used with a Cream Whipper for the purposes of whipping cream. We accept they may also be used to make foams, mousses etc. and that they are used in the production of food products.[31]The packaging is clear that the N2O in the chargers should not be inhaled.[32]If consumed on its own the N2O is tasteless and all but imperceptible. When used with the Cream Whipper the N2O does not affect the taste of the cream or other fat solution (mousse sauce etc.) its only effect is on the consistency of the whipped foodstuff.[33]On the evidence of Mr Tallon it meets the definition of “food” for food law purposes because it is at least intended that it may be ingested (depending on the dissipation of the N2O prior to consumption. It is also likely to meet the definition of a food ingredient as once applied to the cream (or other food) it is to be presumed that the intention is that the whipped food is intended to be consumed before the N2O has dissipate. the N2O in the chargers certainly meets the definition of and is regulated as a food additive for the purposes of food regulation and therefore, by definition, it is not a substance normally consumed as food. As an additive it is identified by its E number E942.[34]Its purpose, when used as directed on the packaging in which it is sold, is as a processing aid in the form of a propellant and/or as a foaming agent and the Chargers.[35]N2O does not contain protein, fat, carbohydrate, or fibre; it is calorie free and so despite its propulsive properties when used with the Cream Whipper it does not provide the human body with energy. It may be used in the body as part of certain biochemical processes but need not be ingested for these purposes.[36]We cannot determine how much, if any, of the N2O would be ingested by a human consuming whipped cream made using a Cream Whipper and the Chargers. On the evidence before us it cannot exceed 0.79g but is likely to be less than that and the amount is likely to change as the time elapses between the cream leaving the Cream Whipper and consumption.[37]We accept that N2O is used, in limited amounts, by the body; however, the Appellant presented no evidence (and Professor Niranjin’s letter did not seek to substantiate) that N2O dispensed from the Charger was intended to be absorbed for the purposes of ensuring the body had the N2O it needs. Mr Tallon accepted that to the extent that the N2O was ingested it would be expected that some may be metabolised, but we consider that is a likely (possibly necessary) inference from the fact that some is ingested and does not result in a conclusion that the N2O in the Chargers is used for the purposes of providing the body with N2O.[38]The Chargers are certified as Halal compliant. However, the certificate does not state that they are compliant as a food product.

Relevant legislation

[39]Section 30 VATA provides that supplies meeting one of the definitions in Schedule 8 shall be zero rated such that no output tax is due on the supply (though input tax incurred in connection with those supplies may be deducted).[40]Group 1 Schedule 8 provides for the zero rating of identified general items subject to exceptions with some such exceptions subject to overrides. We are not concerned with the exceptions or the overrides and only need to determine whether the N2O within the Chargers meets the description provided for in Item 1 i.e. whether it is “food of a kind used for human consumption”. Submissions of the parties Appellant’s submissions

Submissions of the parties

[41]The Appellant contends that the N2O is food.[42]In the course of correspondence the Appellant contended that the N2O in the Chargers could be favourably compared to bicarbonate of soda which had been held by the Tribunal in Phoenix Foods Ltd v HMRC [2018] UKFTT 18 (TC) (Phoenix)to be zero rated.[43]Mr Parr placed particular reliance on the use to which the Chargers were put and the fact that the N2O was food grade regulated as a food additive E942. He submitted that in these circumstances there should be no debate as to the liability of the Chargers as we are “debating a matter which had already been decided”.[44]He contends that the N2O, as part of air, is life giving and therefore nutritious and as the N2O caused the cream to be whipped/propelled from the Cream Whipper it was a source energy and thus had nutritional value even in the sense explained by Mr Tallon.

HMRC’s submissions

[45]HMRC contend, by reference to the Court of Appeal judgment in HMCE v Ferrero UK Limited [1997] STC 881 (Ferrero) that we have an uncomplicated task: we must determine whether the N2O contained in the Charger is accurately described as “food of a kind used for human consumption”. As confirmed in HMRC v Procter & Gamble UK Limited [2009] EWCA Civ 407 (P&G) that question is not “one calling for or justifying over-elaborate … legal analysis. It is a short practical question calling for a short practical answer.” They say that the relevant perspective from which it is appropriate to answer that question is that of the ordinary person in the street who has been informed about the product and the surrounding circumstances.[46]Drawing from an extensive and thorough review of the very many cases which have considered the scope of the food zero rate Ms Arhestey contended that we should undertake a multifactorial exercise considering and weighing up the following factors to answer the relevant question from the relevant perspective:(1) Nutritional value(2) Palatability(3) Form of the product(4) Manner of/directions for consumption(5) Frequency of consumption(6) Marketing(7) Purpose of the product(8) Range of uses(9) Constituent ingredients(10) Dictionary definition of food[47]Fairly, we were taken to each of 20 first instance decisions in which products including, edible flowers, algae derivatives, herbal teas, bread starters, bicarbonate of soda, linseed oil and carbon dioxide have been considered and assessed to determine whether they are food of a kind used for human consumption. In doing so she recognised her professional duty to ensure that as the Appellant was unrepresented our attention should be drawn to matters both in support of her contentions and those against.[48]HMRC assessed each of the factors identified in paragraph 46 above. In the main Ms Arhestey considered the factors to be either neutral or supporting a conclusion that the N2O was not food of a kind used for human consumption. Drawing the threads of all of the cases together HMRC contended that the case most analogous to the present situation was Gas & Chemicals Ltd v HMRC (decision number 18160) (G&CL)concerning carbon dioxide /nitrogen.

Discussion

[49]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.[50]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?[51]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.[52]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.[53]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.[54]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.[55]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.[56]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.[57]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.[58]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.[59]Relevant to this appeal, that Tribunal made the following observations and determinations:(1) Under the scheme of regulation of food, food “ingredients” are defined to include food additives provided that they are present in the finished product (paragraph 42).(2) Some food additives are zero rated as food, but others are standard rated as reflected in HMRC’s guidance (paragraph 43).(3) Whilst bicarbonate of soda contains sodium which is an essential nutrient for the body the bicarbonate of soda is not usually consumed as a food itself and is used in food for the purposes of leavening. It is not used as a means of ingesting the sodium required by the body for growth, maintenance, and development (paragraphs 44 – 7).(4) The correct test to be applied is that of the informed observer who must undertake an overall assessment of the facts rather than assign particular weight to any individual factor (paragraphs 94 – 97).(5) Zero rating may apply for products which require preparation before consumption, ingredients for food and which contribute to the production of food in a supply chain of production (paragraph 98).[60]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.[61]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.[62]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.[63]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.[64]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.[65]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.[66]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.[67]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.[68]For these reasons we consider that N2O is not a food and accordingly, the supply of Chargers containing the N2O are properly standard rates.[69]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.

Right to apply for permission to appeal

[70]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. Release date: 16th OCTOBER 2025

Cited in 1 later judgment