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HMRC internal manual

VAT Food

Excepted items: confectionery: treatment of particular products: cereal bars: sweetened cereal bars

If an ingredient is added to the cereal in a bar, and that added matter sweetens the bar, for the purposes of the law it is sweetened. However, there is some debate about whether this applies if the matter has been added for other functional reasons.

This principle was first discussed in the case of W Jordans (Cereals) Ltd (V.3275). In this case, the appellant argued that they used honey not in order to sweeten the cereal bars, but to bind the ingredients without making the finished product too brittle. The tribunal concluded: It does not seem to us that the purpose for which the honey was added can be relevant. What is relevant is, did the inclusion of some 20 percent of honey and in total 26.9 and 24.5 of sugar content (expressed as sucrose) result in the two products being a sweetened form of food?. In our view the bars are sweetened and we say this having tasted them as well as because of the figures we have quoted.  

However, this case contrasts against the case of SIS (Science in Sport) (V.17116). The trader manufactured energy bars known as GO-BARS. In the manufacturing process, the company removed some of the original fruit juices in the bar, such as apple and orange, and replaced it with grape juice, which resulted in an increased acidity and reduced the overall sweetness of the bar.

In allowing the appeal, the tribunal said: In the production of GO-BARS where a base fruit juice is replaced by grape juice and the overall effect of the replacement bar is a reduction in the sweetness of a bar (and a corresponding increase in its acid content), does the fact that the grape juice contains sugars which in part replace those removed result in the bar being sweetened? Our answer to that question is in the negative.  

This type of approach was also accepted in the case of Bells of Lazonby where a less sweet variant of golden syrup was used to bind the bar. However, it was the functional reason for the use of this syrup that was acceptedas crucial as the bar required such a substance to bind it together. It was therefore found that the syrup had not therefore been added to sweeten the bar. However, the product in this case was found to be confectionery per se and standard-rated. The Chairman in that case stated:

…However, the Organix tribunal, despite the comment we have set out, went on to conclude that the product with which it was concerned was not confectionery because it was not sweetened.

We disagree with that approach, and instead adopt the view of Sir Andrew Morritt C in Premier Foods (Holdings) Ltd v Revenue and Customs Commissioners [2007] All ER (D) 363, a judgment given after this appeal was heard, that inherent (as distinct from added) sweetness is not incompatible with the classification of a product as confectionery. The difficulty for the Appellant, in our view, is that there is no other description which fits this product. Regardless of the words of Note (5), the most suitable description of this product is confectionery, giving that word its ordinary English meaning. The informed ordinary person, asked to classify this product after having discarded the description ‘cake’, would struggle to find any appropriate term other than ‘confectionery’. Thus it falls within Excepted Item 2 and is correspondingly standard-rated.

This therefore leaves the position open to some debate. We consider that cereal bars are items of confectionery, and on the approach of the Bells of Lazonby case, that should be enough to standard rate such a product. However, several earlier tribunals have not agreed that all cereal bars are confectionery, although the question of whether they were asked to consider if those bars should have been treated as confectionery per se, and whether the emphasis of those cases focussed too heavily on the sweetened issue, are of note.