Jaffa cakes are cakes because that was also tried and tested in the court.
Cakes are zero-rated because they are food stuffs for VAT, that is unless you are selling them as supplies in the course of catering (as in from a restaurant) when they become standard rated.
Biscuits are confectionary, confectionary is not a food stuff and so it is standard rated for VAT.
Flapjacks are…cakes, museli bars which are made of oat cereal are cakes, but if mixed with other cereals are probably biscuits.
Chocolate Body Paint is…a food stuff and zero-rated.
Costs v benefits to the taxpayer
HMRC’s published guidance says that “Marshmallow teacakes, Marketed under a variety of names, such as munchmallows, mallow cakes, teacakes, coconut mallows etc, these consist of a cake or crumb base topped with a dome of marshmallow coated in chocolate or carob, sugar strands or toasted coconut, and may be individually wrapped in foil…have been traditionally accepted as cakes.”
therefore it is difficult to see why HMRC took a case to the tribunal at the expense of the taxpayer on Snowballs, which are coconut mallows, after all.
Since losing the Snowball case, HMRC has added more guidance, “VAT: Liability of snowballs”
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