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HMRC internal manual

VAT Food

Excepted items: Ice cream etc: Ice cream and similar products

HistoryUnder purchase tax, ice cream and similar products were taxed. With the introduction of VAT on 1st April 1973, these products were included in the general zero-rating for food and were zero-rated between 1st April 1973 and 31st March 1974. However,

excepted item no 1 was introduced on 1st May 1974 so that these products became standard-rated from that date.

The wording relating to frozen yoghurt was found to be overly restrictive in that it taxed yoghurt which was frozen for storage purposes but not suitable for eating when frozen and therefore not analogous to ice cream. Item 1 of the items overriding the exceptions was introduced with effect from 1st March 1976 to restore zero-rating to this type of yoghurt.

Ice cream, ice lollies and water ices All types of ice cream, ice lollies and water ices (sorbets) are standard-rated, including those made from unusual ingredients, such as sheep’s milk. The factor which the goods included in the item have in common is that they are designed to be eaten when frozen.

Wafers, cones and similar products sold separately are accepted as biscuits and are zero-rated unless wholly or partly covered with chocolate or some product similar in taste and appearance; but when sold together with ice cream they are standard-rated: the supply of a filled ice cream cone, for example, is regarded as a single standard-rated supply.

However, larger waffle or wafer baskets may be eligible for zero rating in line with the decision of the Tribunal in the case of Marcantonio Foods Ltd (V.15486). The trader produced large waffle baskets which were chocolate-lined, and argued that they were not biscuits. The Tribunal agreed, noting There is no question that the waffle baskets are designed to be containers and not to be eaten on their own. Indeed it would be quite difficult, although not impossible, to hold one in the hand and eat it.

Frozen yoghurt Those types of frozen yoghurt which are similar to ice cream or ice lollies in being designed to be eaten frozen are standard-rated. Indications that standard-rating is appropriate to a product will be given by the satisfaction of any of the following criteria:

  • it is frozen on a stick;
  • it is soft enough when frozen to be eaten with a spoon;
  • it has been aerated; or
  • the container or wrapper gives no indication that the contents should be thawed or stirred before consumption. Frozen yoghurt which must be thawed completely before it can be eaten, and which has been frozen purely for storage or distribution, is zero-rated.