VAT on drinks 'short-sighted' claims supplier
ADDING VAT to sports nutrition drinks is a tax on healthy lifestyles which could cause businesses to fail, a worried supplier has claimed. In the recent budget, the government announced plans to tax sports nutrition drinks – currently exempt from VAT charges – to bring them in line with regular sports drinks.
An HMRC document, VAT: Addressing borderline anomalies, explains more – stating products affected will include protein drinks and workout recovery aids in liquid or powder form but not meal replacement drinks for slimmers and invalids. The move could potentially generate an additional £10m a year from VAT, but director of Affordable Supplements, Ryan Millar, claims with the current obesity crisis, it is 'short sighted and naive' and punishes people for being physically active. He added: "The more I think about it, the more it seems like a tax on lifestyle choice. I think we need to highlight the fact it is discriminate to tax a product on intended use. If I intend to use whey protein to slim I am exempt from VAT, but if I want to use it to recover faster from physical activity I should be paying VAT? I think we need to highlight that physical activity is key to the underlying problems with the nation’s obesity, respiratory problems and heart disease".
Ryan has also written to his local MP Yvette Cooper and has urged others with concerns to do the same. In the letter he added: "The industry has already been severely hit by massive increases in whey prices since 2007 and as such, a further 20 per cent rise would have massive negative implications on profitability, resulting in the inevitable failure of many smaller businesses." In this Olympic year what kind of message does this send out to aspiring athletes and people who generally want to improve their level of fitness? The document admits the change "might lead to small increase in the prices of sports nutrition drinks which would lead to a fall in demand", but claims the macroeconomic impacts are expected to be 'negligible'. A consultation period is open until May 4 and the full document can be viewed at http://www.hmrc.gov.uk/budget2012/vat-con-4801.htm Ryan has also been continuing the discussion with others at http://www.muscletalk.co.uk/VAT-to-be-added-to-all-Sports-Supplements-m4748813-p3.aspx
By Christina Eccles