UHY Ross Brooke Chartered Accountants

Have your cake and eat it, but is it VAT-free?

food vat rate ruling

In a ruling*, reminiscent of the Jaffa cakes/biscuits story, the FTT has ruled that products described as flapjacks were not cakes. Cakes are classed as zero rated for VAT purposes, and therefore this ruling meant that these flapjacks were indeed subject to VAT at the standard rate.

The Vat Food Manual of 28/02/2022 states that flapjacks can qualify for zero rate VAT. The manual states that although flapjacks were historically classed as cakes, they ‘should probably now be categorized as a cereal bar and therefore standard-rated, within the legislation’.

Their classification in this case was based on a number of factors including size, packaging, shelf life, product name, taste and texture.

The FTT has stated previously** that ‘It is difficult to see any logic in these convoluted provisions but they are the rules which we must apply’.

Some of the rulings of the FTT appear contradictory and are made on tiny details which appear at first glance to have little to do with the product itself.

The take-away from this story is that sometimes what appears clear cut is not, and it could be worth taking the advice of a specialist accountant.

Do get in touch if you have questions about your own products’ VAT rate.

See also https://www.ross-brooke.co.uk/juice-drinks-hmrc-vat/

*Glanbia Milk Ltd v HMRC 24/3/2022
**Corte Diletto v HMRC 2020 UKFTT 75 (TC)

Share This Post

Related insights

Talk to us

Newbury: 01635 555666
Abingdon: 01235 251252
Swindon: 01793 610008
Hungerford: 01488 682546