Dog food manufacturer bites taxman!

Posted: 13th September 2012

dog1A leading dog food manufacturer could be in line for a tax rebate running into millions of pounds after inflicting a stinging defeat on Her Majesty’s Revenue and Customs (HMRC) at the First Tier Tribunal.

For a period of almost 30 years, between 1980 and 2009, Roger Skinner Limited paid nearly £7 million in VAT on four of its dog food products, unaware that they could have been viewed as exempt from the tax.

The First Tier Tribunal has now opened the way for the company to seek a bumper tax refund after accepting that the dog foods should have been zero-rated for VAT because they were targeted at gun and working dogs, not pets.

Tribunal Judge, Barbara Mosedale, said that early packaging used by the company bore a picture of a golden retriever, the archetypal gun dog. The bags had ‘a very agricultural presentation’ and the products were advertised in working dog titles like the Shooting Times, The Field and Working Dog.

The company's dog foods were marketed at field trials and country shows and the judge accepted that consumers of the company’s own label products ‘were mainly if not entirely owners of gun dogs and working dogs’.

Despite HMRC arguments that the products were marketed as suitable for ‘all dogs’ and could have been bought by pet owners, the judge ruled that they had been specifically labelled and marketed for working dogs and fell within the category of ‘animal feeding stuffs’ that are zero-rated for VAT.

The company may still face arguments from HMRC that its VAT refund claims were lodged too late and as to the value of any rebates and interest due. Those issues will be the subject of a further tribunal hearing if settlement terms are not agreed.