Sweet taste of victory in confectionery VAT tribunal
When is a snack not a snack was the theme of a recent case in which Innovative Bites disputed a significant tax bill at a recent Tribunal.
The Loughborough-based confectionery firm brought the case after receiving a more than bite-size £473,000 tax bill in respect of their Mega Marshmallows which HMRC argued were a confectionery snack and not an ingredient.
Evidence presented to the judge centred on the fact that the oversized marshmallows were much larger than those normally sold as snacks, measuring some 5cm high as opposed to a more regular 2.5cm.
They were also sold for the primary purpose of making S’mores – an American treat where roasted marshmallows are sandwiched between chocolate and biscuits.
HMRC lawyers attempted to overturn these arguments suggesting that despite their size, the Mega Marshmallows could still be purchased and eaten as a snack, regardless of the manufacturer’s intentions.
However, the presiding judge considered the company’s arguments and concluded that the Mega Marshmallows were indeed ingredients.
In his ruling, Judge Jonathan Cannan cited the fact that the product’s packaging clearly displayed that they were for roasting and that the positioning of the Mega Marshmallows in the barbecue sections of supermarket aisles also suggested as much.
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