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Flapjacks are too chewy to be taxed as desserts, tribunal guidelines | Legislation


A spread of flapjacks have been discovered to be sweets somewhat than desserts and subsequently topic to VAT, in a judgment that might have huge monetary implications for producers of the treats.

The tax tribunal dominated that 36 flapjacks produced by Glanbia Milk weren’t desserts, that are zero-rated for VAT functions, as a result of they might not be eaten for afternoon tea, have been extra generally eaten on the go, weren’t baked and contained vital quantities of protein.

Judge Christopher Staker and Caroline Small tasted 4 of the merchandise and located them to be – not like desserts – not aerated, and to have “a dense, chewy consistency similar to a fruit bar or an energy bar. The ordinary person would not consider this to be the typical texture of a cake”.

The two-person panel mentioned the Glanbia Milk merchandise contained “significant amounts of protein, an ingredient not traditionally associated with cakes” and {that a} typical cake can be “squarish rather than long and thin”.

Its members additionally mentioned that desserts have been sometimes eaten at celebratory features, whereas the flapjacks below scrutiny can be thought of by the abnormal particular person to “look wholly out of place as a dessert at the end of a meal, or as the food to be consumed at an afternoon tea”.

They added: “If held up to a group of contestants in a game where a point is awarded to the first contestant to call out correctly what the object is, the tribunal is satisfied that the majority of contestants would say spontaneously that the product is a ‘bar’, or a ‘fruit bar’, or an ‘energy bar’.”

The case is harking back to the court docket battle between McVitie’s and HM Customs and Excise (now HMRC) within the Nineties when the UK’s tax authority unsuccessfully argued that Jaffa Cakes have been biscuits and so ought to entice VAT.

Glanbia Milk, which is predicated in Birmingham, was interesting towards a choice by HMRC that the corporate had incorrectly categorized its flapjacks as desserts somewhat than standard-rated for VAT functions. It made an software within the case to introduce samples of comparable merchandise with a zero score made by rival producers, however the tribunal panel questioned the relevance of this proof and mentioned it was not its function to find out whether or not different firms’ merchandise had been appropriately rated.

Nevertheless, Staker and Small made a variety of observations in regards to the distinction between “traditional” and trendy flapjacks, which may have ramifications for different producers. They famous that HMRC inner steering states that flapjacks generally must be thought of to be much like cereal bars, that are categorized as sweets, except they’re akin to these offered within the Seventies – when VAT was launched – which have been broadly accepted as desserts.

In its written judgment, the panel mentioned: “Compared to a ‘standard’ flapjack purchased in a cafe or at a supermarket, the products in this case had fewer calories, about 10 times less sugar (with no sucrose or other standard sugar added), and very low levels of fat …

“The ordinary person would not consider the products in this case to have the texture or appearance of a typical flapjack, let alone that of a typical cake.”

This article was amended on 17 April 2022. The McVitie’s case was towards HM Customs and Excise, not HMRC, which was shaped by the merger of HMCE and the Inland Revenue in 2005.



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