Biscuit vs Cake ??

Accountants have loved Jaffa Cakes for years…because of the VAT implications of the great “Cake v Biscuit” court case. And then Brownies were pulled into the mix a couple of years ago with their own VAT court case.

But, last week, Marshmallows entered the arena with a “when is a sweet not a sweet?” question that made it to the courts.

HMRC has been chasing £472,928 of VAT from Innovative Bites on the sales of its Mega Marshmallows. HMRC stated that these are sweets, which should have VAT charged. However, Innovative Bites claims that it is a food used for cooking – roasted over a camp fire with chocolate and digestive. And food used for cooking has no VAT.

The Judge ruled that “the product does not fall to be described as confectionery”, which means it is indeed a food used for cooking with no VAT bill for Innovative.

This is a big headline court case but how does it apply to you? VAT is a complex area and the rules over what is, or isn’t, subject to VAT can be difficult to understand. Therefore, it’s always worth asking an expert.

PS If you’d like to know more about the Jaffa Cakes and Brownies, Billie recorded a video a couple of years ago that you can see by clicking here


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