Are Jaffa Cakes chocolates or cakes?

Are Jaffa Cakes chocolates or cakes? This was a serious VAT question for accountants as cakes are zero rated for VAT purposes whilst luxury biscuits (although not basic biscuits) are standard rated (currently 17.5%%) for VAT purposes. The matter was settled in 1991 by a tribunal and Jaffa Cakes were officially designated a cake not a biscuit. Now Burning Our Money informs us that the ever marvellous Nice cup of tea and a sitdown website inform us that there is much "confusion over the chocolate-covered teacake - a dome of marshmallow on a biscuit swathed in milk chocolate - could cost the British government £3.5m after an EU court adviser said the retailer Marks & Spencer should get a refund of the tax it paid during the decades that tax authorities insisted they were biscuits." "From 1973 to 1995 the Teacake which has a biscuit base was accepted to be a biscuit and being covered in chocolate was liable to VAT at the full rate. This is the converse of the Jaffa Cake which as a cake gets away with zero rating. However, in 1994 Marks & Spencer successfully got the Teacake reclassified as a cake, and thereby made a claim for all the excess tax they had paid over the last 21 years. A small proportion of that sum was paid out some three years later.
Now Marks & Spencer may be closer to retrieving the rest as one EU rule clashes with another, according to Juliane Kokott, Advocate-General of the European Court of Justice. The case will need to go to theEuropean Court of Justice before a decision is made."


The article goes on to discuss Hobnobs, plain and chocolate covered and the Bahlsen PICK UP.

Take a read but do realise that the whole matter only became an issue because of the then EEC.