TAX CASES - 31.05.2022
Cake or confectionary?
Glanbia Milk Ltd v HMRC. Glanbia (G) treated a number of its products (cereal bars and flapjacks) as zero-rated cakes. HMRC argued that they were standard rated confectionary products.
Law. Flapjacks and cakes are listed as zero-rated products in VAT Notice 701/14 . The question was whether an ordinary person would think they were eating a cake were they to consume one of these products.
Decision. Amusingly, the judges offered to sample all 36 products in question. In the end, they had to make do with just four. They commented that the products had a “crunchy rather than chewy texture” , which was not consistent with eating a cake. The appeal was dismissed.
This case is a reminder how fine the line can be when it comes to the VAT treatment of food products. Ensure clients are relatively certain that zero-rating applies accordingly.
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