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HMRC internal manual

VAT Food

Excepted items: confectionery: treatment of particular products: cereal bars: cereal and fruit bars

With effect from 1st May 1988, note 5 to Group 1 was amended to bring cereal bars within the definition of confectionery. This was intended to bring to an end the uncertainty about the liability of cereal bars that had lead the tribunal to give a number of varying rulings on very similar products.

However, decisions in more recent years have again thrown the position of cereal bars into some uncertainty.

A typical type of cereal bar excluded from zero-rating is typically made from ingredients that have been compressed, bound together and sweetened, or bound together with sweetening matter. Previously, when approaching a decision on the liability of a cereal bar, it was common to ensure that it was sweetened to qualify as confectionery. However, tribunal decisions in the cases of W Jordans (V.3275), Science in Sport (v.17116), Organix (V.19134) and Bells of Lazonby (V.20490) have shown that this is not always the case.

The Bells of Lazonby tribunal considered a cereal bar bound together with ragus syrup. Ragus syrup is a less sweet variant of golden syrup, and was an essential ingredient to bind the bar together. The tribunal decided that the product was not sweetened as it was an integral part of the product, and had not been added to the bar with the specific intention of sweetening it. However, the tribunal did decide that, regardless of that fact, the cereal bar in question should still properly be classified as an item of confectionery. In this approach it followed the decision of the High Court in the case of Premier Foods (Holdings) Ltd ([2007] All ER (D) 363), under which an item can still be classified as confectionery even if it has not been sweetened.

The Organix case was decided years before the Bells of Lazonby case, above. It concerned a cereal bar bound together using concentrated fruit juices. The tribunal decided that the concentrates were used for functional reasons, and that they did not sweeten the bar, which also included pieces of dried fruit. However, the tribunal did not appear to be asked the same question as in the Bells of Lazonby case, and the question of whether the product was an item of confectionery per se was not addressed.

Therefore, to determine the liability of a cereal bar:

  • firstly, ask the question of whether anything has been added to the bar with the specific intention of sweetening it (this would bring it within note 5 of the law and class the product as confectionery) - see also VFOOD7160 on sweetened;
  • secondly, even if it has not been sweetened, should it be treated as an item of confectionery?
  • lastly, even if it is confectionery, does it have sufficiently strong characteristics of either biscuits or cakes such that it could potentially fall within a different part of the law (as a biscuit or a cake) and be zero-rated?