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HMRC internal manual

VAT Food

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

Excepted item 2 now excludes from zero-rating, biscuits wholly or partly covered with chocolate or some product similar in taste and appearance. This phrase refers to the external surface of the biscuit, and to any amount of chocolate or chocolate substitute covering it. The tribunal in the case of North Cheshire Foods Ltd (MAN/86/0216) confirmed that biscuits with nine or ten fine lines of chocolate amounting to about 1% of their content piped over the surface were caught by excepted item 2, and standard-rated.

The following are not considered to be wholly or partly covered and are zero-rated:

  • chocolate chip cookies;
  • gingerbread men with chocolate eyes;
  • cylindrical biscuits with chocolate on the inside;
  • biscuits containing an internal chocolate flavoured filling, but none on the outside surface (for example, a Bourbon);
  • chocolate dip biscuits, where separate plain biscuits are sold with a chocolate sauce to be dipped into; and
  • biscuits covered with preparations of caramel, which is not chocolate or some product similar in taste and appearance. Should a trader argue that a chocolate biscuit is

filled as opposed to covered, you should consider the tribunal ruling in the case of United Biscuits (MAN/02/0563). In that case, Customs and Excise was found to be correct in asserting that a chocolate biscuit, in the form of a tartelette, was covered with chocolate for the purposes of Group 1.