What links Jaffa Cakes, Pringles and puppies? The answer is that they have all been the subject of court cases to determine their treatment for Value Added Tax (VAT).

VAT is a tax that is added on to the price of goods and services sold by VAT-registered businesses. Most things are either standard-rated (20%) or zero rated, with a handful of specific goods and services having special rates in between. Where businesses think they have an argument for applying a lower rate, many are willing to go to court on the matter.

Both the Jaffa Cakes and Pringles cases revolved around the peculiar rules surrounding food. As a staple of everyday existence, the majority of food items are zero-rated. However some food items, usually those considered a luxury, are subject to VAT at the standard rate.

Chocolate covered biscuits are considered luxury items whereas, somewhat oddly, cakes are not. The makers of Jaffa Cakes therefore sought to prove that they were cakes. In support of this assertion, they went so far as to make a giant Jaffa Cake, to demonstrate its cakey nature to the court. Whilst the name alone was not considered persuasive, the overall qualities of their product allowed them to win the day.

Pringles were less lucky. They wanted to prove that, contrary to the belief of many, their product was not the luxury item known as the crisp. Initially they won, with the potato content of less than 50% working in their favour. Alas HMRC appealed, and the higher court decided that potato still being the largest ingredient was what counted. With £100million historical tax at stake, this was not a welcome result.

Finally, puppies were the subject of one of the more odd areas of VAT. Where you buy and sell goods second-hand, both transactions being with members of the public, you only have to account for VAT on the profit, if any. This is most commonly applied to cars, but one businessman tried to apply it to man’s best friend. Sadly, they too failed in their claim. For the puppies to be second-hand, the original owner would have had to have purchased them. Instead they had been “acquired” by a standard biological process involving their adult dogs.

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• For years HMRC have been telling us that tax doesn’t have to be taxing. Just these three cases prove that, for VAT at least, tax can be very taxing indeed. Hopefully none of our readers will have to go to the lengths that these businesses had to go to deal with their VAT. If you want your VAT to go smoothly, why not book an appointment with Steve Brown of Coleman Webb on 01424 211800 today.

 

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https://www.hastingsindependentpress.co.uk/wp-content/uploads/2018/04/BUS-puppies-1024x1024.jpghttps://www.hastingsindependentpress.co.uk/wp-content/uploads/2018/04/BUS-puppies-150x150.jpgSteve BrownBusinessJaffa Cakes,Pringles,puppies,Value Added Tax,vatWhat links Jaffa Cakes, Pringles and puppies? The answer is that they have all been the subject of court cases to determine their treatment for Value Added Tax (VAT). VAT is a tax that is added on to the price of goods and services sold by VAT-registered businesses. Most things...The Hastings & St Leonards non-profit community newspaper