Upper Tribunal hands taxpayers a clear win on multiple supplies in takeaway VAT disputes.
On 19 May 2026 the Upper Tribunal (Tax and Chancery Chamber) released its decision in Queenscourt Limited v HMRC [2026] UKUT 00195 (TCC). The UT allowed the taxpayer’s appeal in full, holding that dip pots supplied with takeaway meal deals are separate zero-rated supplies of cold food, not part of a composite standard-rated supply with the hot food.
The Facts
Queenscourt operates KFC-style outlets. Customers buy meal deals that include hot chicken, chips, a drink, and a dip pot (e.g., BBQ or garlic sauce). The question was whether the dip pots formed a single composite supply with the hot food or whether they were a distinct zero-rated supply of cold takeaway food.
HMRC had previously repaid VAT on the dip pots following an earlier claim. It later sought to recover the amounts under s80 VATA 1994, arguing the supplies were standard-rated.
Upper Tribunal Decision
The UT overturned the FTT on the key legal point. It held that once a transaction is analysed as a multiple supply, every element must be treated as a distinct and independent supply unless it falls within the narrow exceptions established by case law (CPP, Levob, etc.). The FTT had erred in law by permitting a “composite element” within a multiple supply.
Because the dip pots were accepted as cold food capable of being supplied separately, they were zero-rated. The UT re-made the FTT decision accordingly.
Practical Takeaways for CFOs
1. Review current VAT treatment of add-ons and extras. Any item that can be supplied separately and meets the zero-rating criteria should be treated as such, even when bundled in meal deals.
2. Document the commercial reality. The UT emphasised customer choice and the ability to acquire items separately. Keep clear records showing how products are presented and sold.
3. Act on refunds and assessments promptly. The decision clarifies the boundary between multiple and composite supplies. Businesses that have overpaid VAT on similar items should consider protective claims.
4. Monitor HMRC guidance updates. The ruling may prompt HMRC to revisit its position on other “ancillary” items in the foodservice sector.
Key References
- Full Upper Tribunal decision (GOV.UK)
- Download the judgment PDF
- Claritax detailed analysis
- National Archives case record
- HMRC Revenue and Customs Brief 5 (2026) – related VAT relief
- Deloitte Business Tax Briefing 22 May 2026
- HMRC Revenue and Customs Briefs collection
- HMRC VAT Food Manual
- Tax Journal – latest VAT commentary
- Agent Update Issue 143 (May 2026)
- Consultation on company tax returns (responses due 2 June 2026)
- GOV.UK Tax and Chancery Tribunal decisions
Need help applying this ruling to your business? Contact Mark Hendy at mark@tanous.co.uk or via the contact form on this site. Tanous provides practical CFO advisory on VAT, tax disputes, and compliance for UK owner-managed and private equity-backed businesses.