Not a Snowball’s Chance in Hell?

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In surely a victory for common sense, the VAT courts have now officially agreed that the “snowball” products produced by Scottish bakers Thomas Tunnock and Lees of Scotland are to be classified as cakes and are therefore free of VAT.  It could be said that the law on VAT on food in the UK is symbolic of how different we are to other parts of the world.  I can’t imagine anywhere else where the VAT liability of a product that has been on sale well before VAT was even dreamed of could now be an issue; or where the amount of chocolate buttons on a gingerbread man could take on such importance (dots for eyes are OK, but extra buttons or a belt would render the product liable to 20% VAT). Honestly, it reads like a script from Yes Minister.

So what is going on here?  On one hand, the variety of food products expands all the time and a new product may not easily fall in to the already complex law on food products. But on the other hand there is definitely an indication that the VATman sees the current VAT rules as being too generous and ripe for some extra tax to be obtained.  HMRC appear to fight hard to retain our zero rates from the EU, who do not believe in a nil rate of tax. But behind the scenes, HMRC appear to be nibbling away at the edges (sorry, awful pun) of the relief.  In 2012, an attempt was made to tax the good old British pasty and sausage roll before the government gave in, the Jaffa Cake has been targeted and now this attempt to tax snowballs.  What is next?

So what were the factors that led to snowballs being zero-rated as a cake?  Essentially the Tribunal panel sampled the products (in moderation) and sat a snowball on a plate with Jaffa Cakes and teacakes and agreed that it did not look out of place with these other cakes.  The product would usually be eaten sitting down and it looks like a cake.  It was also revealed that a survey of VAT officers in the Dundee office also found that the majority of the local VAT officers thought snowballs were cakes.

What a crazy, but entertaining VAT world this is!