As we commented back in April the VAT treatment to be applied to the sales of Giant Marshmallows has appeared at both the First and Upper VAT Tribunals with HMRC losing on both occasions. These Giant Marshmallows are Zero rated for VAT purposes as food products not confectionary, say the courts – but HMRC are not content and have been granted leave to go to the Court of Appeal.
A date has not been set yet but it does raise the question as to why HMRC seem so intractable in their arguments on this particular issue. We’re all familiar with the complexities of the VAT interpretation on food liability products – Jaffa Cakes or the ambient temperature of a pasty from a baker spring immediately to mind – so the oddity of size, how a product is held out by the retailer are not new.
When HMRC admit to being under-resourced to support taxpayers seeking help with VAT queries, then spending their limited budgets on these types of protracted legal disputes could be called into question.
Either way – we await the next legal hearing.
Speak to an expert
If this subject has raised questions about the VAT liability applied to food supplies in your organisation then get in touch.
