Paws for thought: Absurd VAT distinctions for animals

By Elliot Keck, investigations campaigns manager


There is no end to the absurdities of the UK’s VAT system.

But one chapter not yet written is that of VAT on pets and animal products. If Dilyn the Downing Street dog was half as influential as his number of column inches suggest, perhaps this mind-bogglingly arcane system would have been changed and simplified many budgets ago.

Running at an eye-watering and sleep-inducing 11 pages, our VAT system for animals and animal products seems purpose-built to make the sale of pets, pet food and animal products as difficult and confusing as possible. The first of the many seemingly arbitrary distinctions relates to whether or not a live animal is of a kind “generally used in the UK” or “yielding or producing food for human consumption.” If such an animal fits this description, it is zero-rated; if not, it is standard-rated (at 20 per cent).

Consequently, the sale, hire or loan of cows, sheep, and chickens is zero-rated. Sounds reasonable enough. But this distinction means that horses are standard-rated, as they do not produce food for human consumption. It also creates a divide between the honey bee, which is zero rated, and the bumblebee, which is standard rated.

Australian trade negotiators may take particular note here. Kangaroo meat, widely available and consumed down under, is standard-rated because kangaroos are not animals “generally reared for food in the UK.”

The real minefield in VAT on animals and animal products, however, comes in the distinction between food for animals and pet food, and between pet food and food for working animals. What this means is that food to be fed to animals is theoretically zero-rated, except if it’s canned, packaged or prepared pet food, packaged food for wild birds, or biscuits and meal for cats and dogs. Which, in essence, sounds like all animal food!

Yet the tax system does make an exemption for working dogs, at least in theory. As the code explains, “if a specially formulated food is held out for sale exclusively for working dogs it will come within the scope of the VAT relief.” However a “product which is claimed as being suitable for all breeds, size and age of dog” is standard-rated. This results in the farcical consequence that food for greyhounds is standard-rated, whereas food for racing greyhounds is zero-rated. Whatever your views on the ethics of greyhound-racing, this is madness.

There is a need for reform, then, as an HMRC internal manual makes particularly clear. In this document, supposed to provide guidance on determining the liability of supplies of food to VAT, it lists a number of examples of tribunals and cases held to determine whether a product intended for animals should be standard-rated. For example, the document points to “one enterprising manufacturer [which] produces a canned food for feeding to hedgehogs.” It was decided that this should be zero-rated despite being “similar in composition to canned dog and cat food” because hedgehogs aren’t pets. Try telling that to some accounts on Instagram!

Life would be made infinitely easier for anyone engaged in the sale or purchase of animals or animal-related products if the system were simplified. All animals should be taxed at the same rate, as should all animal food. 

By simplifying the tax code, we could make life easier for all involved in the sale and purchase of animals - whether they’re pets or farm animals. This would be a win for those on both two legs and four!

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