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HMRC internal manual

VAT Food

Excepted items: Confectionery: The bounds of confectionery, sweets, chocolates, chocolate biscuits, cakes and biscuits: The borderline between confectionery and zero-rated food

Background Confectionery is

food but is specifically removed from the zero-rating provisions by excepted item 2. Products which are similar to items of confectionery, but are not actually eaten as such, can therefore qualify for zero-rating since they fall within Group 1 general item 1, but do not fall within excepted item 2.

In Smith Kline Beecham PLC (LON/91/0837), the liability of Lucozade Sport tablets and Horlicks Maltlets was considered. The former are made from spray-dried maltodextrin and dextrose monohydrate (sugars), and little else, and taste sweet. The latter are made from Horlicks powder with very small amounts of sugar used as an agent to disperse vitamins, but they are not sweet to the taste. It was found that Maltlets were sold by chemists, where they are displayed with invalid and specialist foods. Lucozade tablets are sold in chemists and supermarkets, where they are generally displayed with medicinal, vitamin or meal replacement products.

The appeal was held after the amendment of note 5 to Group 1 so that confectionery was defined as including items of sweetened prepared food normally eaten with the fingers. It was accepted in this case that the product was food, and that it was eaten with the fingers, so the appeal turned entirely on whether the products were sweetened prepared food.

The tribunal found that this description did not apply to Maltlets, because the amount of sugar was insignificant and they were not sweet to the taste. It also did not apply to Lucozade tablets because they were almost entirely composed of ingredients which were naturally sweet, and so could not be said to be sweetened: the analogy quoted was with a lump of sugar, a zero-rated food. Neither product was therefore found to satisfy the definition of confectionery and they were therefore zero-rated as food.

The tribunal were not asked the question of whether these items were confectionery per se, but were asked to address the words in Note 5. See the much later decisions of the court in the case of Premier Foods ([2007] EWHC 3134 (Ch)) (VFOOD6120) and Bells of Lazonby (V.20490).

Chocolate confectionery Chocolate confectionery is within

excepted item 2 and standard-rated, but there are several types of chocolate product which are used in manufacturing or cooking processes, which are not regarded as confectionery and which are therefore zero-rated as food. They are:

  • chocolate couverture - sold in bulk for use in cooking;
  • chocolate cakes etc;
  • bars of cooking chocolate;
  • cake decorations - chocolate in the form of leaves or other shapes;
  • cake cases, and other specialised products used in food manufacture;
  • chocolate flake when packaged and sold for use in cooking;
  • chocolate chips for use in cooking;
  • chocolate body paint; and
  • chocolate spread.

Baking ingredients Items used solely in the production of cakes, which can be superficially similar to some types of confectionery but are not eaten as such, are zero-rated. Some examples are:

  • edible cake decorations, including small crystallised fruit sold as such;
  • angelica;
  • drained cherries;
  • candied peels; and
  • hundreds and thousands and vermicelli. Inedible cake decorations are standard-rated but may be zero-rated when they are supplied as part of a cake.

Ice cream toppings Items that are held out for sale solely to be used as toppings for desserts and ice cream are zero-rated.