DuelFuel sends warning to functional food firms after tax tribunal defeat

DuelFuel products include a carbohydrate-based flapjack and a protein-rich cake slice packaged together and designed to be consumed before (flapjack) activity to provide energy and after (cake) activity to provide amino acids for muscle protein synthesis.

The slices are made using the same equipment and processes used to manufacture conventional flapjacks and cake slices but with reduced sugar and fat levels and added multi-vitamins and minerals, and milk protein concentrate and bovine collagen powders as replacement for standard flour.

Because of the these healthier ingredients, the brand’s founder Tim Davies has been in a legal battle with HM Revenue and Customs since launching the range in January 2022, when he was informed his products would be classified as ‘confectionery’ and therefore subject to 20% VAT, as opposed to ‘cakes’ (which are VAT free as a staple food).

“The consequences were devastating on our business, to the point I had to cease DuelFuel trading in the summer of 2022,” Davies told NutraIngredients, adding that heย was confident the decision was incorrect as he had sought professional advice from two VAT specialists during the development of DuelFuel to ensure products adhered to HMRCโ€™s guidance on cakes.

Having exhausted all avenues to appeal HMRCโ€™s decision directly, Davies filed an appeal with the First Tier Tax Chamber (โ€œFTTโ€) in April 2022.

The Tribunalโ€™s rulingโ€‹

The Tribunal heard DuelFuelโ€™s appeal in September 2023 and released its rulingโ€‹ย just this month, affirming that the products will be classed as confectionery.

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