Food - relevant case law regarding supplies of confectionery

By Tolley
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The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Food - relevant case law regarding supplies of confectionery
  • Zero-rated
  • Standard-rated

This guidance note provides an overview of case law regarding whether products are regarded as zero-rated cakes or standard-rated items of confectionery.

Zero-rated

The following are examples of cases where the court has held that the item is not confectionery and therefore zero-rated for VAT purposes.

Jaffa cakes

The company produced a product known as 'Jaffa Cakes'. The product consisted of a small round piece of sponge cake, on which was a small amount of sweet orange jam, and which was entirely covered by a thin layer of chocolate.

HMRC issued a ruling that 'Jaffa Cakes' were biscuits covered with chocolate, so the product came within the scope of VATA 1994, Sch 8, Group 1, Excepted Item 2, and the product was therefore liable to VAT at the standard-rate.

The company appealed against the HMRC ruling contending that the 'Jaffa Cakes' were cakes rather than biscuits, therefore the supply should be zero-rated.

The tribunal accepted the business's argument and allowed the appeal, observing that the ingredients of the sponge part of the 'Jaffa Cake' were 'virtually the same' as the ingredients of a traditional sponge cake. The 'Jaffa Cakes' were moist and had the texture of a sponge cake, and the sponge was a substantial part of the product in bulk and texture, rather than simply a base for the jam and chocolate.

United Biscuits (UK) Ltd, LON/91/160 (VTD 6344) (subscription sensitive)
Cereal bars

Organix sold fruit and cereal bars, specifically designed for young children. The bars contained oats, raisins, and fruit juice concentrates.

HMRC issued a ruling that the bars were confectionery, and they were liable to VAT at the standard-rate.

The company appealed, arguing that the bars were not within the definition of 'sweetened prepared food', and therefore should be zero-rated.

The tribunal accepted

More on Zero-rated supplies: