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HMRC internal manual

VAT Food

Excepted items: Confectionery: The bounds of confectionery, sweets, chocolates, chocolate biscuits, cakes and biscuits: Definition of confectionery

In considering the meaning of the term confectionery, most tribunals have considered a number of judicial authorities which have attempted general definitions. Commonly quoted is the purchase tax case of Popcorn House Ltd, (1968 4 All ER page 782), where the judges considered the meaning of similar confectionery in the phrase chocolates, sweets and similar confectionery (including drained, glacé or crystallised fruits).

The following definition of confectionery arose from that case: any form of food normally eaten with the fingers and made by a cooking process, other than baking, which contains a substantial amount of sweetening matter. Both chocolates and sweets fall within this definition: they are normally eaten with the fingers, they are not made by baking, and they have substantial amounts of sweetening matter in them.

However, the High Court, in the case of Premier Foods ([2007] EWHC 3134 (Ch)) has subsequently commented that the criteria of baking and sweetening are not to be relied upon. Accordingly, it appears the error of the Tribunal in applying the dictum of Mr Justice Lawton in Popcorn must be recognised as an error of law. Its application also gave rise to two more errors… the tribunal clearly directed themselves that for an item to be classified as confectionery for the purposes of excepted Item 2 and Note 5, its production must have involved (a) a process which can be recognised as cooking and (b) the addition to the primary ingredient of an extra element as sweetness. In my judgment, neither of those elements is a necessary condition for a product to be classified as confectionery. I accept the production of confectionery must involve some process applied to the ingredients in their natural state for that is necessarily implicit in the word. I do not consider that such process can only be one capable of being described as cooking. Any process of mixing or compounding is, in principle, sufficient. Similarly, I accept in its ordinary usage, confectionery is limited to products which can be described as sweet but I cannot see why such sweetness may not be inherent in the principal ingredient in its natural state but must be added by some further sweetener with which it is mixed or compounded … the tribunal erred in law in considering those two elements were essential to the categorisation of these fruit bars as confectionery.

A general set of principles has arisen from these cases which HMRC accept is a satisfactory approach to take when determining whether a product is a cake, biscuit or another type of confectionery:

  • words in the law must be given their ordinary meaning;
  • what is relevant is the view of the ordinary man in the street;
  • the VAT treatment of other products (including competing products) is not relevant;
  • if a product has characteristics of two categories (i.e. cakes and biscuits), it can be placed in the category in which it has sufficient characteristics to qualify. Factors that should also taken into account include:

  • appearance, size and ingredients;
  • manufacturing process;
  • taste and texture;
  • time and place of eating;
  • packaging;
  • marketing - which may be of varying degrees of relevance. It should be noted that tribunals and higher courts have generally not regarded legal precedents or detailed technical analyses of products as definitive; they have rather taken them as part of an overall picture which in the end relies heavily on impression and a common sense view of what the ordinary informed taxpayer would think.

When you are determining the liability of a product and reading the appropriate paragraphs in this section, it is important to adopt the above approach which was heavily influenced by the case of Ferrero UK Ltd ([1996] STC 866). The confirmation of this approach by the Court of Appeal has given us a clear guide as to what factors to consider when determining the liability of borderline products.