Earlier this month, the UK’s First-Tier Tax Tribunal, with Judge Amanda Brown in charge, heard Telemara Limited vs HMRC. Britain’s tax authority had found itself in another food-related scrap, this time over how cream chargers — canisters of nitrous oxide used to, among other things, rapidly whip cream — ought to be treated for tax purposes.

Telemara sold such chargers on to caterers and wholesalers. Nyron Parr, a former director of the company, had treated the chargers as zero-rated during the period under scrutiny. Parr’s argument was that the products were supplied solely for culinary purposes, and therefore should be zero-rated for value-added tax under the broad exemption in place for food:

In his witness statement, and by reference to his oral evidence, Mr Parr explained his understanding that the Chargers were intended exclusively for culinary use and their use was not limited to whipping cream but also to make foams, mousses etc and to infuse liquids.

The judgment continues:

[Parr] believed the N2O dispensed to have nutritional value because of the traces of other elements that might be present and because, as a gas which formed a component of air, it sustains human life.

HMRC believed this was incorrect, that the chargers should instead be standard-rated, and levied with VAT at 20 per cent. They sought to recover the lost tax of about £1.5mn — who knew so much cream was in need of charging?

So… are cream chargers food? It’s a simple-enough question, so naturally a judge ended up getting involved.

Ballooning costs

Mark Tallon is the managing partner and founder of Legal Foods. A “chartered scientist, biologist and registered nutritionist”, and fellow of the Royal Society of Medicine, Royal Society of Biology, and Institute of Food Science and Technology, he has for more than a decade worked as an expert witness on matters on food.

He is also, we would guess, the first person to huff nos in aid of the UK legal system.

Tallon’s role as expert witness — a neutral agent between Parr’s wish to escape a pretty hefty bill, and HMRC’s efforts to have Parr not escape said bill — was to present some objective information about cream chargers to help Judge Brown make a decision that would uphold the integrity of the UK’s tax system.

It appears Tallon took this job very seriously:

Mr Tallon’s report runs to 42 pages including appendices and was accompanied by a bundle of supporting material and literature of 1707 pages. He is a chartered scientist and registered nutritionist with a particular specialism on food law. We accept that his experience qualifies him as an expert in the matters to which his evidence relates.

In fact, it appears Tallon took this job very seriously:

Mr Tallon considered the N2O, which he dispensed into a bag and inhaled (contrary to the product’s instructions) to be colourless, tasteless, and odourless though he accepted that certainly odour and taste might be experienced differently by different people.

FT Alphaville caught up with Tallon on Thursday, and asked him how doing a small amount of laughing gas ranked for oddness among things he’s had to do as an expert witness.

“Yeah it’s pretty strange,” he told us.

Tallon said he was satisfied, having studied the literature, that the amount he was inhaling would allow him to assess whether the gas had a flavour without taking on too many side-effects:

It’s extremely low-risk, so that’s why it’s worth doing. It was material for the case to be able to show that it didn’t have a taste. It wasn’t like I emptied 20 chargers into a black bin liner and got myself high, it was just a mouthful of nitrous oxide to get a taste.

Moving swiftly on…

No laughing matter

Underlying Tallon’s… thorough… approach was an attempt to discount any taste or nutritional qualities the nitrous oxide might be providing, which could then strengthen an argument that it is a kind of food in and of itself.

Unsurprisingly, there are not many. Although a cream-charger-powered whipping process produces a different texture of cream, the cream doesn’t then taste different nor undergo any tangible nutritional change. Judgment:

As accepted by both Mr Tallon and Professor Niranjan, N2O, once removed from the Charger, and therefore available for “consumption” in the widest sense, is a gas. It is therefore incapable of being either eaten or drunk indicating that it is not a food.

Further, it is colourless, odourless, and tasteless. Whilst we accept that these factors on their own cannot be determinative as the same could be said for water, we do consider it significant that N2O, in gas form and in the quantity contained in the Chargers is imperceptible once released from the Chargers.

The panel rejected any comparison to often flavourless, often scentless (certainly not in Iceland) and generally neutral favourite, water:

By reference to the meaning we consider an ordinary informed person would apply when considering whether something used for human consumption is “food” we consider that whether it is nutritious is a relevant consideration. We distinguish “nutritious” from having “nutritional value” if, and to the extent that, “nutritional value” bears the meaning used by Mr Tallon and Professor Niranjan. This is because, in our view, not all substances which would be considered as food provide the body with energy in the form of carbohydrate (including sugar), fat, protein or fibre. Water is the paradigm example. It is nutritious in the sense that it is consumed to maintain life.

In addition, the judgment noted:

We have no evidence other than Mr Parr’s unsupported assertion that the Chargers contain trace elements, and we find that it is more likely that they contain only N2O.

There are some complexities here. One that the panel considered was how nitrous oxide might substantively relate to something like bicarbonate of soda — generally not considered a foodstuff by itself, but a crucial part of some excellent foods. They concluded, somewhat open-endedly:

In that context as bicarbonate of soda was an essential ingredient in some bread and cakes critical to the taste and texture of those foods, it was not “cosmetic” in the sense that it was a preservative or colouring. As it was sold as a baking ingredient for sale in supermarkets or retail grocers, its intended market was as a food ingredient to be used as leavening and not for any contribution to nutritional value (in the widest sense discussed above as it provides no “energy”). Whilst its purpose in culinary use was different it was similar to salt in terms of its essential characteristics as a food ingredient and, like salt packaged and sold for culinary use, was properly zero rated.

They also examined other gaseous elements added to foodstuffs:

— An example of an ingredient not considered to represent food on an overall assessment of the facts is carbon dioxide used in the production of beer to form its head as demonstrated in G&CL. The Tribunal in that case found as a fact that the gases were food grade and were supplied to public houses for used when beer was dispensed through a tap to produce a head (it was not used as a propellant) and that once the beer was served the gases would dissipate. The gases affected the aroma of the beer by delaying the customers experience of it until the beer was consumed.

— Counsel for the taxpayer in that case contended that the gases became an essential constituent of the beer particularly the head and therefore zero rated.

— The Tribunal concluded that the gases were not zero rated as they were not food of a kind used for human consumption. It concluded that no relevant informed and broad-minded individual considering whether the gases were food would conclude that they were.

Vapourware

You can probably tell how this one was going to go. Judgment:

We have carefully considered the facts as we have found them. We remind ourselves that we do not need to put the factors which may point one way on one side of the pan scales or the other and see which way it tips. What we must do is assess them in the round from the perspective of an informed person and ask whether N2O is food.

We conclude that it is not.

Womp womp.

Further reading
— Why every Nik-Nak gets taxed, but Takis Fuego pays low