JD Wetherspoon PLC v Revenue and Customs (application of reduced rate to supplies of cider in the course of restaurant and catering services - whether cider fell within the exclusion) [2025] UKFTT 658 (TC) (03 June 2025)

Parties

Procedural Posture

VAT Appeal (first Tier Tribunal, Tax Chamber) / Preliminary Issue Determination

Legal Issues

1. 1 Whether cider falls within the exclusion from the reduced rate of alcoholic beverages in Group 14 of Schedule 7A to the Value Added Tax Act 1994;
2. 2 Whether the Inco principle for correcting obvious errors in legislation applies to insert cider into the definition;
3. 3 Whether, absent the Inco principle, the exclusion of cider from the definition is compatible with paragraph (12a) of Annex III of Directive 2006/112/EC and the EU principle of fiscal neutrality.

Ratio Decidendi

The Tribunal held that, on a strict construction, the statutory language of Group 14 did not include cider within the definition of 'alcoholic beverage.' However, the conditions for applying the Inco principle were satisfied: there was an obvious drafting error, the legislative intent was clear from the context and materials, and the correction was necessary to give effect to that intent. Therefore, cider should be read into the definition, meaning it was excluded from the reduced rate. Even if the Inco principle did not apply, the exclusion of cider from the definition would breach EU law and the principle of fiscal neutrality, requiring a conforming interpretation to the same effect....

Court Disposition

Appeal dismissed

Orders

• Cider is to be treated as excluded from the reduced rate of VAT for the relevant period under Group 14 of Schedule 7A to the Value Added Tax Act 1994.
• No repayment of VAT is due to the Appellant in respect of supplies of cider during the relevant period.