Mr. Kevin Hurley:

Under the EU VAT directive, certain member states were allowed a derogation from the minimum reduced VAT rates. The cut-off date was 1 January 1991. Ireland had a zero rate for food on that date, which included food supplements under Revenue's own interpretation of the VAT directive, which is repeated in its guidance throughout the years. The products that were permitted to be zero rated at that time could continue to be zero rated but after that date, we could not bring in any new zero rates. If we were to legislate to exclude food supplements from zero rate the same way as other products are excluded, such as sweets, crisps, cakes and biscuits, although they are afforded a reduced rate, thereafter we would not be able to change that legislation and reintroduce them at the zero rate because that would, in effect, be introducing a new VAT rate. The fact is that on 1 January 1991 these products were food. They were entitled to the zero rate under the EU rules. Revenue's claiming that there is a concession places us in an extraordinary situation. Ireland was treating food supplements as food and was compliant with EU VAT legislation but, if this was understood as a concession, we would be in breach of EU rules and possibly open to EU infringement proceedings.