Vaping products – potential VAT claim

A lead case is being taken to the First-tier Tribunal on the VAT liability of vaping products. If successful, this could lead to a 15% saving on the sales price, and claims could go back 4 years. Markel Tax are helping suppliers to protect their position.



Author: Stuart Brodie

Over two years ago, Markel Tax identified that a lead case was being taken to the First-Tier Tax Tribunal on the VAT liability of vaping products. This has been a long and tortuous process, but we now understand that the hearing is likely to take place in the summer of 2023.

Vaping products have become increasingly popular over the last few years, and as their popularity has grown, so has the debate as to their VAT liability, particularly as a number of studies indicate their usefulness as smoking cessation products.

HMRC have traditionally treated vaping equipment and refills as being subject to VAT at 20%. However, the legislation allows a 5% rate to be applied to “Pharmaceutical products designed to help people stop smoking tobacco”. The key questions arising from this definition are:

  1. Are vaping products pharmaceutical, and
  2. Are they designed to help people stop smoking?

Many in the vaping industry believe that their products tick these two boxes, but to date no one has challenged HMRC in the courts.

We have been helping clients since 2020 to protect their position by quantifying their claims, submitting these to HMRC and managing the process thereafter to keep the claims alive and stood behind this lead case.

Claims can go back four years from the point of submission, so if you have clients who manufacture or sell vaping products, the sooner a claim is submitted, the further back it can go. Each VAT quarter of delay could mean a significant lost opportunity should the lead case ultimately be successful. Those who we submitted claims for in 2020 now will have at least a seven-year benefit if the case is successful. However, it is certainly not too late for others to protect their position.

We have experience of submitting these claims and would be happy to support you through the process.

For more information, please contact stuart.brodie@markel.com or call us on 020 3815 8999.

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