The Lanarkshire firms, Tunnock’s and Lees who make confectionery, biscuits and cakes have just won a near 20 year battle with HMRC over the legal definition of a Snowball. HMRC classed the Snowball as confectionery and therefore subject to VAT in the same way biscuits are vatable.
Tunnock’s and Lees regarded the Snowball as a cake, similar to Teacakes. Products classified as cakes do not attract VAT!
After many, many tasting sessions, the Judges at the First-tier tax tribunal ruled in the manufacturers favour on appeal, meaning a recovery of £2.8M in VAT by the two manufactures.
I have no idea as to the logic behind why cakes are not subject to VAT, perhaps someone can enlighten me. I can see the logic on children’s clothes and shoes not attracting VAT, but cakes??
Especially nowadays when health experts are telling us to eat less sugar and to add a sugar tax to certain products. It does seem strange that a cake does not already attract VAT.
Anyone fancy a Snowball then?
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