Simon Bradshaw

First 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.