“S’more” success in VAT appeal
Innovative Bites Ltd v HMRC. The company (I) was a retailer of American confectionary and related items. Among its products was an item called “mega marshmallows” - oversized versions of regular marshmallows. It sold these with VAT at 0%. HMRC raised an assessment, arguing that the product was confectionary. I appealed.
Law. Under Schedule 8, Group 1 VAT Act 1994 , food items are zero- rated. However, this is subject to a number of exceptions, including confectionary such as chocolate, sweets and biscuits.
Decision. The crux of I’s argument was that the product was intended to be roasted before eating or used in a “s’more” (essentially a heated marshmallow sandwiched between two biscuits). It was therefore a food product, not confectionary. The majority of sales fell in the summer to early autumn, which I said showed a link to barbecue season. HMRC pointed out that the product was found on the company website under “sweets, candy and chocolate”. The First-tier Tribunal judge agreed with I, saying that the marketing on the packaging, and the location in supermarkets (with barbecue products) meant that a typical consumer would conclude the product was supposed to be roasted before consumption.
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