Domino's Pizza Group Ltd v Customs and Excise, United Kingdom VAT & Duties Tribunals, Judgment, Law, casemine.com

Citation Codes

Equivalent Citations

citation codes

Attorney(S)

Michael Conlon QC and Miss Sadiya Choudhury, counsel, instructed by Ernst & Young for the Appellant
Owain Thomas instructed by the Solicitor for the Customs and Excise, for the Respondents

See more information ...

Click here to read the full judgment

Domino's Pizza Group Ltd v. Customs and Excise

Smart Summary

Factual and Procedural Background

The Appellant, Company A, operates and franchises pizza stores in the UK and Ireland, supplying freshly-cooked pizzas and garlic pizza bread to customers either for collection or delivery. The dispute concerns the correct VAT rating of these supplies—whether they should be zero-rated as general food or standard-rated as supplies in the course of catering under the VAT Act 1994. The central statutory provision defines "supply in the course of catering" to include any supply of hot food for consumption off the premises, where "hot food" is food heated for the purpose of enabling it to be consumed above ambient air temperature and is so at the time of supply.

The Appellant contends that the heating is solely for cooking the product and not for enabling consumption hot, whereas the Commissioners argue the purpose includes enabling consumption hot. The case proceeded through an appeal against a ruling that the supply is standard-rated. The court conducted an on-site visit to the Appellant’s premises, heard evidence from the Chief Executive Officer of the Appellant and a franchisee, and examined the operational and marketing practices of the Appellant.

Legal Issues Presented

Whether the supply of freshly-cooked pizzas and garlic pizza bread by the Appellant, both for take-away and delivery, is zero-rated or standard-rated under the VAT Act 1994.
Whether the heating of the products is done for the purpose of enabling them to be consumed hot (above ambient temperature) at the time of supply, thereby falling within the definition of catering supply.
How to apply the "dominant purpose" test in determining the purpose of heating under the relevant VAT provisions.

Arguments of the Parties

Appellant's Arguments

The heating applied to the products is solely to cook them, producing a freshly-baked product, not to enable consumption hot.
The Appellant is neutral as to the temperature at which the products are consumed by customers.
Reliance on the dominant purpose test from John Pimblett and Sons Ltd v Customs and Excise Commissioners [1988] STC 358, asserting the purpose of heating must be the dominant purpose of the supplier.
An initial alternative argument that the time of supply rules meant the products could not be considered hot at the time of supply if payment preceded cooking was abandoned.

Commissioners' Arguments

The correct approach is to test the Appellant’s asserted purpose objectively against the broad circumstances of the supplies.
The use of uncooked ingredients does not negate the purpose of enabling consumption hot, especially as products are cooked to order and kept hot after cooking.
Compliance with food safety regulations does not detract from the purpose of enabling consumption hot.
Advertising and delivery methods emphasize keeping the product hot to ensure consumption at a temperature above ambient air temperature.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
John Pimblett and Sons Ltd v Customs and Excise Commissioners [1988] STC 358	Definition of "purpose" in heating food for VAT purposes; dominant purpose test; distinction between subjective and objective tests.	The court applied the dominant purpose test subjectively but tested asserted purpose by evidence, emphasizing that incidental consumption hot does not establish the purpose of heating.
Malik v Customs and Excise Commissioners [1998] STC 537	Clarification of dominant purpose test where multiple purposes exist.	Confirmed that where more than one purpose exists, the dominant purpose must be identified; applied to distinguish cases where heating was incidental from those where enabling consumption hot was dominant.
Lutron v Customs and Excise Commissioners (1989) VAT Decision 3,686	Incidental heating not amounting to purpose of enabling consumption hot.	Used as example where food was baked but not kept hot for consumption, supporting the idea that heating purpose was not to enable consumption hot.
Greenhalgh's Craft Bakery v Customs and Excise Commissioners (1992) VAT Decision 10,955	Heating for reasons other than enabling consumption hot.	Supported the notion that heating to prevent sogginess and other effects does not equate to purpose of enabling consumption hot.
The Great American Bagel Factory Limited v Customs and Excise Commissioners (2000) VAT Decision 17,018	Heating incidental to product preparation not purpose of enabling consumption hot.	Example of heating not intended to keep product hot for consumption but part of preparation.
Tuscan Foods Limited v Customs and Excise Commissioners (2004) VAT Decision 18,716	Heating not for purpose of enabling consumption hot.	Confirmed that toasted sandwiches sold in ordinary bags were not heated for consumption hot purpose.
Pret a Manger (Europe) Limited v Customs and Excise Commissioners (1999) VAT Decision 16,246	Heating necessary because product is inedible cold.	Distinguished cases where heating was necessary to enable consumption hot.
The Lewis's Group Limited v Customs and Excise Commissioners (1990) VAT Decision 4,931	Compliance with health and safety regulations not equating to purpose of enabling consumption hot.	Held that keeping chicken hot due to regulations was not the purpose of heating for consumption hot.
N M Holmes T/A The Chicken Shop v Customs and Excise Commissioners (1999) VAT Decision 16,264	Similar principle as Lewis's Group decision.	Confirmed health and safety compliance does not establish purpose of enabling consumption hot.

Court's Reasoning and Analysis

The court applied a subjective test to determine the purpose of heating the products but did not accept the Appellant’s asserted purpose at face value. Instead, it tested this purpose against the full factual matrix, including what happens after the products leave the oven. While the Appellant emphasized heating solely to cook the product, the court found that the deliberate steps taken to keep the pizzas hot after cooking—placement in specially designed boxes on heated racks, use of heated delivery bags, and marketing emphasizing delivery of hot pizzas—demonstrated a purpose to enable consumption hot.

The court distinguished this case from precedents where heating was incidental or motivated by regulatory compliance, noting that here the Appellant actively sought to keep the product hot until consumption, which is a significant factor in determining purpose. The court reasoned that creating a freshly-baked product was part of the larger purpose of enabling consumption hot, making the latter the dominant purpose of heating.

Consequently, the court rejected the narrow view that the purpose ended at cooking and held that the purpose of heating included enabling the products to be consumed hot, thus falling within the definition of catering supply subject to standard VAT rating.

Holding and Implications

The court’s final decision was to DISMISS THE APPEAL, affirming that the supply of freshly-cooked pizzas and garlic pizza bread by the Appellant, both for take-away and delivery, is standard-rated for VAT purposes.

This decision directly affects the parties by confirming the VAT treatment of the products as standard-rated. No broader precedent beyond the application of the dominant purpose test and the interpretation of "purpose" in heating food under VAT law was established.