I have been approached with this question:
A local catering firm will supply some of the drinks. The centrepiece of the drinks will be large jugs of “summer shake” which will be a simple milk drink flavoured with fresh strawberries and a little sugar.
The catering firm has confirmed it will turn a blind eye if Natalie arranges for her father to discreetly add half a bottle of alcoholic strawberry liqueur to most of the jugs, carefully labelling those left alone as “suitable for children”.
What is the VAT position?
Would I be correct in saying that even though a milk drink is a zero-rated product, because it is supplied by a catering firm, it would be subject to VAT of 20%. Therefore, the alcoholic aspect is irrelevant as it would be standard rated anyway?
Please let me know if this is on the right lines or if there is anything else important to add to this