S’mores, S’mores, S’mores! – How do you like that?

The judgment in the VAT case Innovative Bites Ltd [2022] UKFTT 352 (TC) adds another layer of complexity to the vexed question concerning the VAT liability of food items.

In simple terms, VAT is not charged on the supply of staple food items. Foods considered luxury items such as confectionery, ice cream, wines and spirits and crisps are taxed at the standard rate of VAT.

Consequently, marshmallows are a standard-rated item of confectionery. Except that is, where the marshmallow is an oversized variety that is suitable for toasting, or as the principal ingredient in the US/Canadian delicacy that is the “S’more”.

For the unenlightened, a S’more is a marshmallow sandwiched between a layer of chocolate and two “Graham Crackers” (digestive biscuits of sorts).

In his summing up Tribunal Judge Jonathan Cannan gave the following reasons for agreeing with the appellant that the giant marshmallows could be zero-rated….

“On balance we accept that the Product does not fall to be described as confectionery. The fact that it is sold and purchased as a product specifically for roasting, the marketing on the packaging of the Product which confirms that purpose, the size of the Product which makes it particularly suitable for roasting and the fact that it is positioned in supermarket aisles in the barbecue section during the summer months when most sales are made and otherwise in the world foods section, leads us to that conclusion.

The case offers some ‘food for thought’ (sorry) on how advisors might approach other marginal cases.

Toffee Apple anyone?

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