November 24 2014 Latest news:
Duncan Brodie, business editor
Wednesday, June 4, 2014
A Suffolk dog food manufacturer has scored another victory in a wrangle with the taxman which could result in a multi-million pound VAT windfall.
Roger Skinner Ltd, from Stradbroke, secured a tribunal ruling in 2012 that four of its products which were targeted specifically at gun dogs and other working dogs between 1980 and 2009 should have been treated as zero-rated for VAT.
The company was unaware of the concession during the time the four lines were in production and, as a result, handed over nearly £7million in VAT, which is normally applied to pet food.
However, its hopes of claiming a rebate have now received a further boost, with an appeal by HM Revenue & Customs (HMRC) against the first tier tribunal ruling two year ago having been rejected following an upper tribunal hearing.
Animal feeding stuffs, such as those used by farmers in livestock production, are zero-rated for VAT and the taxman accepted as long ago as 1994 that feed produced specifically for racing greyhounds should be treated in the same way.
In 2002, HMRC also recognised that formulated food sold exclusively for working dogs could be covered by the same relief, unless it was classed as “biscuit or meal”, a category specified in a schedule of exceptions along with other types of pet food.
The first tier tribunal concluded that the term “meal” referred to “a mixer for use with meat or canned dog food”, whereas the Skinners products in question each represented a complete diet on their own.
Mr Justice Newey, who presided over the upper tribunal hearing last month, has now concluded that this interpretation was correct, although, it remains unclear whether the company will receive a rebate.
A spokesman for HMRC said yesterday: “HMRC will not be appealing the decision, and we are currently considering the implications.” However, it is understood that HMRC could yet contest some “held over” elements of the original ruling which were not covered by the upper tribunal decision.
The Skinner family, which has owned a mill in Stradbroke for seven generations, branched out into complete dry dog foods in the 1970s as a natural extension from animal feed compounding.
It was in 2009 that, as a result of a chance remark concerning the possibility of ferrets being classed as working animals rather than pets, that chairman Roger Skinner realised the same principle could apply to a number of former products aimed specifically at working dogs.
Paul Whittle and a team from Colchester-based accountancy firm Whittle & Co has been acting for the company, with barristers Michael Conlon QC and Anne Redston putting its case at tribunal, instructed by Peter Crix of Gotelee Solicitors in Ipswich.