Tony Sanguinetti, founder of Minerva Research Labs, has lost a legal challenge concerning a £3.6bn tax bill. A judge ruled that his collagen product cannot be classified as food, meaning it is not eligible for VAT exemption.
Sanguinetti established Minerva Research Labs in London in 2009. The company's first product, Gold Collagen Pure, launched in the UK in 2011 and is made from cow hides and sardine scales. The product is reportedly the UK's best-selling collagen drink, with the company generating annual revenues of £16m.
Minerva had previously paid VAT at the standard rate. However, after being advised by HMRC, the firm declared in 2022 that it had overpaid VAT between January 2018 and January 2022, arguing its products were food and should have been zero-rated.
Tribunal judge Anne Redston acknowledged that the main purpose of food is to nourish the body and that the product's ingredients were a significant factor. However, she ultimately rejected Minerva's arguments, stating that a product being edible and having nutritional value does not automatically classify it as food under UK tax law.
Sanguinetti expressed disappointment, stating that consumers seeking food with special functions, such as supporting joints, are penalised with an extra 20 per cent VAT, while some ultra-processed foods are not. James Austen, a partner at Collyer and Bristow representing Minerva, said the company is considering options for an appeal, noting that the case highlights the "uncertain and unsatisfactory VAT treatment of products like Minerva’s in the UK marketplace." An HMRC spokesperson welcomed the decision.