Marks & Spencer’s newest culinary providing – a strawberries and cream sandwich impressed by Japan’s viral “fruit sando” – has captured not simply the general public’s creativeness (and ire), but additionally the eye of tax specialists.
On the coronary heart of the talk is a deceptively easy query – is it a standard-rated confectionery merchandise, or a zero-rated sandwich for VAT functions?
This types a part of a broader (and surprisingly fraught) dialogue – when is a sandwich actually a sandwich? We typically name a Victoria sponge cake a Victoria sandwich, but it surely’s not a sandwich. A sizzling canine arguably meets the structural definition of a sandwich, but we not often consider it as one. However this isn’t simply semantics, VAT is at stake.
Below present UK VAT guidelines, sandwiches are typically zero-rated, whereas confectionery attracts the usual 20% price. M&S’s new candy deal with muddies the road between dessert and sandwich. Tax specialists recommend it may fall below a legislative modification protecting “sweetened ready meals eaten with the fingers,” doubtlessly pushing it into taxable territory.
The strawberry sandwich row joins an extended historical past of comparable circumstances, from the notorious Jaffa Cake determination to pasty temperature exams, highlighting the frighteningly advanced world of meals tax regulation within the UK.
Culinary clashes
- Jaffa Truffles – in 1991, the Jaffa Cake case shocked the nation. HMRC contended they have been chocolate-covered biscuits (standard-rated), whereas McVitie’s argued they have been desserts (zero-rated). Finally, partly as a result of they go mushy when stale, versus exhausting, the tribunal dominated in favor of McVitie’s, classifying Jaffa Truffles as desserts.
- Greggs sausage rolls – to take care of zero-rated standing, Greggs sells their sausage rolls at room temperature, as sizzling takeaway meals is topic to VAT.
- Sensations Poppadoms – in early 2024, Walkers misplaced a court docket battle when judges dominated that their mini poppadoms have been, for tax functions, truly crisps, regardless of being consumed in a very totally different approach. The argument that gained out is that poppadoms are potato-based and packaged for human consumption – the way in which they’re eaten is secondary.
- KFC dip pots – a 2024 case decided that KFC’s dip pots have been a part of the recent meal and thus topic to VAT. That is fascinating because it reveals an reverse ruling to the Walkers poppadom case, because the tribunal targeted on how the product is consumed.
- Pringles – Procter & Gamble argued that Pringles weren’t potato crisps and needs to be zero-rated. In spite of everything, they comprise lower than 50% potato, and have been extra akin to a cake or a bread. Nonetheless, the court docket dominated they contained sufficient potato content material to be categorised as crisps, making them standard-rated.
Meals for thought
The classification of M&S’s strawberry and cream sandwich may have important monetary implications. If deemed confectionery, it will be topic to twenty% VAT, and M&S could be compelled to rethink the viability of the product.
The M&S strawberry and cream sandwich VAT debate is a good instance of how skinny the road is between a giant tax invoice and a zero-rated snack. The distinction between this scrumptious deal with turning into your common responsible pleasure and also you by no means serious about them ever once more would possibly properly rely on how they’re taxed.
