Pringles 'are not potato crisps'

Shock news but a High Court judge has ruled that Pringles are not potato crisps. The court case arose because Procter and Gamble (the makers of Pringles) challenged a H.M.Revenue & Customs decision that Pringles were subject to the standard 17.5% rate of VAT because it was it was "a potato crisp product" which are, unlike most foods, subject to VAT. The decision means that Pringles are now free from VAT.

Procter and Gamble (P&G) argued that Pringles were not potato crisps because of their "mouth melt" taste, their "uniform colour" and their "regular shape" which "is not found in nature". They also argued that Pringles contained non-potato flours. P&G argued that Pringles are more like a cake or a biscuit because they are manufactured from dough, in fact they are only 42% made from potato flour.

This follows on from previous court decisions regarding Jaffa Cakes and Teacakes.

Chocolate-covered teacakes

Further to my blog about the vat rating of jaffa cakes and teacakes, I read that "The UK Treasury is facing a £3.5m bill, because of VAT wrongly imposed on a Marks and Spencer teacake, the European Court of Justice (ECJ) has ruled. Customers paid VAT for 20 years before the authorities accepted the product was a cake, which does not command VAT. The UK argued that paying back the total sum would "unjustly enrich" M&S as customers had paid the money. The ECJ ruled that, in principle, VAT had to be repaid in full, but left the final decision to the British courts."

Of particular interest is the section headed "VAT ON CAKES AND BISCUITS -
How various products are classifed by HM Revenue and Customs"

Shame the BBC can't spell classified...

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.