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HMRC internal manual

VAT Food

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Excepted items: snack products: ‘without further preparation’

Products other than nuts are only within the scope of excepted item 5 if they are packaged for human consumption without further preparation. This effectively means those that are sold in retail packs for eating out of the packet with the fingers. Item 5 does not cover products which would otherwise meet the descriptions within it but which are sold for use in cooking, or need any other preparation before being ready to eat, such as breakfast cereals. Such products are zero-rated.

We interpret further preparation in the sense that something needs to be done to make the product edible, in much the same way as you can see with the treatment of nuts within the law. If sold to be eaten straight from the packet, they are standard-rated; whereas nuts that need to be shelled are zero-rated.

The key phrase further preparation has notably been discussed in four recent tribunals:-

  • Procter & Gamble (Pringles Dippers) (V.18381);
  • United Biscuits (Hula Hoops) (V.18947);
  • United Biscuits (McCoys) (V.19319);
  • Quaker (flavoured rice cakes) (V.20604).

The first case, Procter & Gamble, considered the point and found against HMRC, considering that a Pringles Dipper required further preparation, despite being in an edible state in the packet. This was largely influenced by the bland nature of the product and the very specific design of the product to be used in conjunction with dips.

However, the later three cases all cast some doubt about that decision or at least, in our opinion, give clarity on the question of whether something requires further preparation.

The United Biscuits (Hula Hoops) case considered a packet of Hula Hoops sold with a sachet of seasoning that could optionally be used with the product. The case turned on the fact that opting to flavour a product was a matter of choice and not something that had to be done out of necessity to make it edible/palatable.

The United Biscuits (McCoys) case had similarities to the Procter & Gamble case, as they were selling a packet of their ordinary McCoys product but in a bag which included a pot of dip. They argued that the product was ‘packaged so as to require further preparation’. However, the tribunal disagreed, following the line of reasoning noted in the above Hula Hoops case. Dipping the crisp was an option available to the customer, but was by no means a necessity:

…giving the word its ordinary meaning, we are satisfied that dipping a crisp into a pot of salsa cannot amount to ‘preparation’ in any normal sense of the English language. The purchaser of the Appellant’s product is required to do no more than open a packet of crisps and a pot of dip. He may, or may not, dip the crisps into the pot. The process of conveying crisp to mouth, whether or not it pauses at the pot, is, in our view, commonly and correctly described as eating; it is not preparation.

The Quaker case considered the liability of flavoured savoury rice cakes. The appellant argued that they were packaged to require further preparation such as a topping. HMRC argued that they were not and that they were intended to be edible without such additions. In deciding this point in favour of HMRC, the Tribunal commented:

We found that the essential characteristic of savoury jumbo Snack a Jacks was that they were ready to eat. They required no additional ingredients, no work and no cooking to make them edible. The jumbo Snack a Jacks were strongly flavoured which made them palatable to eat on their own without a topping. We did not consider that the flat top implied that they required further preparation before consumption.

Following these cases, any claims that a product has been packaged such that it requires further preparation before it can be consumed should be viewed carefully, taking into consideration the above decisions.