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major_clangerFirst Jaffa Cakes, then Torq Bars, now Snowballs; is there no end to the confectionary products that the VAT Tribunal has to rule upon?
Clearly not, because following on from the case I posted about a while back we now have a joint appeal by Lees and Tunnocks as to whether their Snowballs are cakes. As before, this is actually a quite important point for all involved, because the question of whether a product is subject to VAT means a 20% price difference (or a substantial cut in your profit margin to maintain the same price.)
The judgment makes it clear that the tribunal took their task very seriously.
20. We would consider ourselves to fall into the category of “ordinary persons” who have been informed, in the sense of having some knowledge, but not specialist knowledge of both cakes and confectionary. It was explained by us that certainly Judge Scott, in common with the millions of men and women who bake cakes or make confectionery or watch TV programmes such as Great British Bake Off, or read the many books and publications covering these topics, has a relatively sophisticated and wide ranging understanding of the many and varied types of cakes, meringues and chocolate confections that are available and their probable modes of manufacture, at least in a domestic setting.
21. We, Messrs Simpson and Cornell and a witness were each provided with a plate comprising a number of confections including one each of a Jaffa cake, Mr Kipling Bakewell Tart, Waitrose meringue, a tea cake manufactured by each appellant, a Lees snowball and a mini jam snow cake. We found that the plate looked like a plate of cakes. We were also left with samples of all of these together with Tunnock’s snowballs. We tasted all of them, in moderation, either at the hearing or thereafter.
22. What are our findings in fact about the Snowballs as far as taste, texture, appearance, and circumstances of consumption are concerned, from our experience?
(a) They are very fragile products,
(b) They are very sweet,
(c) The mallow filling is very similar in the tea cakes and snowballs but slightly looser and sweeter in the snowballs; however if it had not been a comparative tasting, but each had been tasted separately, we find that the mallow would be found to be more or less identical,
(d) The coconut has a strong flavour and adds notable and contrasting texture,
(e) Pieces of coconut fell off as soon as the snowballs were moved or touched,
(f) The chocolate is not particularly noticeable in the Lees’ snowball,
(g) The snowballs are soft and slightly chewy,
(h) They were the most difficult of the confections to eat with one’s fingers,
(i) We, and the witness were left with very sticky fingers, which, as we explained to parties was not dissimilar to eating a cake such as a vanilla slice (or mille feuille or croquembouche); we required to clean our fingers,
(j) The snowballs are of an equivalent size to the other confections on the plate; they are very similar in shape to the teacakes. The snowballs are of a similar size to traditional cakes such as French fancies or cupcakes.
(k) Tunnock’s snowballs are larger than those manufactured by Lees and have a slightly more moist mallow;
(l) Tunnock’s snowballs are individually wrapped in cellophane and, on opening the wrapper, loose coconut which had presumably been dislodged in transit falls out unless one is particularly careful,
(m) Neither of the Appellants’ own brand products were reasonably capable of being eaten in one bite;
(n) The ASDA mini snowballs (produced by Lees) might be capable of being eaten in one bite, as are the mini tea cakes,
(o) The snowballs would normally be consumed with a beverage,
(p) We would not choose to eat a snowball if not seated, preferably at a table, because of the pieces of coconut which fall off;
(q) The snowballs hardened even in the few hours for which they remained on the plate.
They were careful to reason on their observations in light of the proper authorities:
44. As we indicate above, we carefully considered the various factors, identified by the authorities, which come into play when looking at the characteristics of snowballs. Beyond that were we assisted by the authorities themselves? Swedish Snowball is the first reference point in this matter. Although the name is the same, the ingredients, the cooking process and the shelf life of these snowballs are completely different. The ingredients, cooking process and shelf life of these snowballs are in fact very similar to that for teacakes as indeed HMRC acknowledge (see paragraph 33 above).
45. We agree with the reasoning in Goodfellow where it is stated that “This Tribunal is satisfied that there are no objective tests which can be imposed to determine of themselves whether a particular item of confectionary is or is not a ‘cake’”.
46. We agree entirely with the reasoning in Ferrero 2 where Lord Woolfe stated “I do urge Tribunals, when considering issues of this sort, not to be misled by authorities which are no more than authorities of fact into elevating issues of fact into questions of principle when it is not appropriate to do so on an enquiry such as this. The Tribunal had to answer one question and one question only, was each of these products properly described as biscuits or not?”. We substitute the word cake for biscuits.
And in reaching their decision, they gave some helpful judicial guidance on the etiquette of eating such products:
53. A snowball looks like a cake. It is not out of place on a plate full of cakes. A snowball has the mouth feel of a cake. Most people would want to enjoy a beverage of some sort whilst consuming it. It would often be eaten in a similar way and on similar occasions to cakes; for example to celebrate a birthday in an office. We are wholly agreed that a snowball is a confection to be savored but not whilst walking around or, for example, in the street. Most people would prefer to be sitting when eating a snowball and possibly, or preferably, depending on background, age, sex etc with a plate, a napkin or a piece of paper or even just a bare table so that the pieces of coconut which fly off do not create a great deal of mess. Although by no means everyone considers a snowball to be a cake we find that these facts, in particular, mean that a snowball has sufficient characteristics to be characterized as a cake.
I think we should establish the specialist Confectionary VAT Status Tribunal to deal with such matters; I for one will be polishing up my CV when the call comes for applications to be its first judge.
Clearly not, because following on from the case I posted about a while back we now have a joint appeal by Lees and Tunnocks as to whether their Snowballs are cakes. As before, this is actually a quite important point for all involved, because the question of whether a product is subject to VAT means a 20% price difference (or a substantial cut in your profit margin to maintain the same price.)
The judgment makes it clear that the tribunal took their task very seriously.
20. We would consider ourselves to fall into the category of “ordinary persons” who have been informed, in the sense of having some knowledge, but not specialist knowledge of both cakes and confectionary. It was explained by us that certainly Judge Scott, in common with the millions of men and women who bake cakes or make confectionery or watch TV programmes such as Great British Bake Off, or read the many books and publications covering these topics, has a relatively sophisticated and wide ranging understanding of the many and varied types of cakes, meringues and chocolate confections that are available and their probable modes of manufacture, at least in a domestic setting.
21. We, Messrs Simpson and Cornell and a witness were each provided with a plate comprising a number of confections including one each of a Jaffa cake, Mr Kipling Bakewell Tart, Waitrose meringue, a tea cake manufactured by each appellant, a Lees snowball and a mini jam snow cake. We found that the plate looked like a plate of cakes. We were also left with samples of all of these together with Tunnock’s snowballs. We tasted all of them, in moderation, either at the hearing or thereafter.
22. What are our findings in fact about the Snowballs as far as taste, texture, appearance, and circumstances of consumption are concerned, from our experience?
(a) They are very fragile products,
(b) They are very sweet,
(c) The mallow filling is very similar in the tea cakes and snowballs but slightly looser and sweeter in the snowballs; however if it had not been a comparative tasting, but each had been tasted separately, we find that the mallow would be found to be more or less identical,
(d) The coconut has a strong flavour and adds notable and contrasting texture,
(e) Pieces of coconut fell off as soon as the snowballs were moved or touched,
(f) The chocolate is not particularly noticeable in the Lees’ snowball,
(g) The snowballs are soft and slightly chewy,
(h) They were the most difficult of the confections to eat with one’s fingers,
(i) We, and the witness were left with very sticky fingers, which, as we explained to parties was not dissimilar to eating a cake such as a vanilla slice (or mille feuille or croquembouche); we required to clean our fingers,
(j) The snowballs are of an equivalent size to the other confections on the plate; they are very similar in shape to the teacakes. The snowballs are of a similar size to traditional cakes such as French fancies or cupcakes.
(k) Tunnock’s snowballs are larger than those manufactured by Lees and have a slightly more moist mallow;
(l) Tunnock’s snowballs are individually wrapped in cellophane and, on opening the wrapper, loose coconut which had presumably been dislodged in transit falls out unless one is particularly careful,
(m) Neither of the Appellants’ own brand products were reasonably capable of being eaten in one bite;
(n) The ASDA mini snowballs (produced by Lees) might be capable of being eaten in one bite, as are the mini tea cakes,
(o) The snowballs would normally be consumed with a beverage,
(p) We would not choose to eat a snowball if not seated, preferably at a table, because of the pieces of coconut which fall off;
(q) The snowballs hardened even in the few hours for which they remained on the plate.
They were careful to reason on their observations in light of the proper authorities:
44. As we indicate above, we carefully considered the various factors, identified by the authorities, which come into play when looking at the characteristics of snowballs. Beyond that were we assisted by the authorities themselves? Swedish Snowball is the first reference point in this matter. Although the name is the same, the ingredients, the cooking process and the shelf life of these snowballs are completely different. The ingredients, cooking process and shelf life of these snowballs are in fact very similar to that for teacakes as indeed HMRC acknowledge (see paragraph 33 above).
45. We agree with the reasoning in Goodfellow where it is stated that “This Tribunal is satisfied that there are no objective tests which can be imposed to determine of themselves whether a particular item of confectionary is or is not a ‘cake’”.
46. We agree entirely with the reasoning in Ferrero 2 where Lord Woolfe stated “I do urge Tribunals, when considering issues of this sort, not to be misled by authorities which are no more than authorities of fact into elevating issues of fact into questions of principle when it is not appropriate to do so on an enquiry such as this. The Tribunal had to answer one question and one question only, was each of these products properly described as biscuits or not?”. We substitute the word cake for biscuits.
And in reaching their decision, they gave some helpful judicial guidance on the etiquette of eating such products:
53. A snowball looks like a cake. It is not out of place on a plate full of cakes. A snowball has the mouth feel of a cake. Most people would want to enjoy a beverage of some sort whilst consuming it. It would often be eaten in a similar way and on similar occasions to cakes; for example to celebrate a birthday in an office. We are wholly agreed that a snowball is a confection to be savored but not whilst walking around or, for example, in the street. Most people would prefer to be sitting when eating a snowball and possibly, or preferably, depending on background, age, sex etc with a plate, a napkin or a piece of paper or even just a bare table so that the pieces of coconut which fly off do not create a great deal of mess. Although by no means everyone considers a snowball to be a cake we find that these facts, in particular, mean that a snowball has sufficient characteristics to be characterized as a cake.
I think we should establish the specialist Confectionary VAT Status Tribunal to deal with such matters; I for one will be polishing up my CV when the call comes for applications to be its first judge.
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no subject
Date: 2014-06-28 11:47 am (UTC)As long as they leave my caramel wafers alone. :o)
no subject
Date: 2014-06-28 07:04 pm (UTC)no subject
Date: 2014-06-28 12:00 pm (UTC)no subject
Date: 2014-06-28 12:16 pm (UTC)no subject
Date: 2014-06-28 12:39 pm (UTC)no subject
Date: 2014-06-28 06:58 pm (UTC)In effect the position is:
1. Food is zero-rated for VAT.
1.1 Except for confectionary.
1.1.1 Unless it's cake or biscuit.
1.1.1.1 Apart from biscuits with chocolate on.
United Biscuits was about whether Jaffa Cakes fell into 1.1.1 or 1.1.1.1. Torq was about whether Torq Bars fell into 1.1 or 1.1.1.
I am sure there were what seemed like good reasons at the time for each individual decision that led to this. As it is, trying to have a rational scheme now would probably make a fair few popular snacks subject to VAT (massively unpopular with manufacturers and/or the public) whilst taking others out of the VAT regime (not favoured by HMRC).
no subject
Date: 2014-06-28 07:35 pm (UTC)how do other countries deal with this? VAT is after all European. One dreads to think of the German kuchen cases!
no subject
Date: 2014-06-29 06:20 pm (UTC)no subject
Date: 2014-06-29 07:23 pm (UTC)no subject
Date: 2014-06-29 11:46 pm (UTC)The manufacturers all claim that they would have to absorb almost all the additional VAT costs themselves (probably more true than not) and that this would mean large scale redundancies of otherwise hard to place manual workers (probably at least partly true).
I suspect that all the manufacturers have drawn up contingency plans -for example you could do a Cadbury and reduce your package sizes which might help.
no subject
Date: 2014-06-28 09:00 pm (UTC)no subject
Date: 2014-06-29 06:22 pm (UTC)But both tend to have lots of wheat carbs, which aren't as good for you, whereas these snowball abominations reduce the carbs substantially in favour of more eggs (and sugar, but that's there anyway) so theoretically they are better than straightforward biscuits which are definitely bad for you.
and I've just finished my pack of bourbons, might need to go get more from the kitchen...
no subject
Date: 2014-06-28 02:23 pm (UTC)mmm, cake
Date: 2014-06-28 11:43 pm (UTC)no subject
Date: 2014-06-29 01:22 pm (UTC)I think any tax system is going to have weird edge cases like this, so I'm not especially concerned about this one. But it does seem odd that we try to sculpt society by applying a 20% sales tax, or not. Would it be more efficient to do away with VAT completely (or just make it 20% on everything) and increase a more redistributive tax to make up for it?
no subject
Date: 2014-07-03 07:12 am (UTC)> Most people would want to enjoy a beverage of some sort whilst consuming it.
I'd sort of thought that tea and biscuits was a well-established British tradition. If it is then the question of beverage desirability either has no impact on cakeiness, or argues against it (I'd prefer the former).
Or am I missing the point slightly?
no subject
Date: 2014-07-03 08:33 am (UTC)I wouldn't be surprised if one day someone ends up citing this judgment in a PhD thesis on confectionary and beverage etiquette in England 1850-2050.