Who would have thought the VAT rules around food for our pets could be so complicated?

With more of us working from home and being around our pets, has there ever been a better time to celebrate National Pet Month and hand out some extra treats?

However, just as we have for our own snacks and treats, once the tax man gets involved, the VAT rules around food our pets can get a bit complicated. While human snacks have the infamous cake-versus-biscuit arguments for jaffa cakes and VAT, pet foods have their own equivalent: are they for a ‘pet’ or a ‘working’ animal?

One eye-catching report in the media relates to John Burns’ Pet Nutrition (‘JBPN’). JBPN produces and sells specialist pet food with a range of dog food specially formulated for guide dogs. In VAT legislation, the sale of ‘animal feeding stuffs’, unless biscuit or meal, can be zero rated with the exception of ‘pet foods’. HMRC’s own VAT guidance, found in VAT Notice 701/15, states pet food for working dogs can be zero rated. However, in a rather unhelpful move for dog owners (and taxpayers), HMRC’s list of  what it considers to be ‘working dogs’ is limited to sheep dogs, gun dogs and racing greyhounds. 

JBPN had taken the prudent approach of seeking and receiving confirmation from HMRC that guide dogs were working dogs and zero rating its range of specialised guide dog food was correct. However, HMRC returned after the fact with a changed view on the VAT treatment. HMRC subsequently decided that it was subject to VAT at the standard rate rather than the zero rate, handing JBPN an assessment of £2m for underdeclared VAT.

JBPN successfully challenged the assessment, likely due to, at least partly, HMRC’s previous decision that JBPN’s range of food for guide dogs could be zero-rated. However, as is often the case with VAT, many questions remain. What other animals could be considered working animals?  We have many animals that now take on a wide range of support roles. Or, what if the food is also marketed to household pets? 

Something to think about next time you are picking up your pet’s favourite snacks (along with some jaffa cakes for you of course).