VAT rise increases incentive for new build vs restoration

[Feltwell]

Wasn't there some big row about if Jaffa Cakes should be VAT rated or not, or is that urban myth?

If I remember rightly the story goes that Jaffa Cakes had been VAT rated for years, when the makers applied to say they were a biscuit not a cake, despite their name. After a prolonged debate it was settled as biscuits go soft when they go stale, whereas cakes go hard. Therefore Jaffa Cakes are in fact biscuits.

This thread must get a new prize for drift, although I suppose it's still about VAT at least......

 

[LadyArowana]

Wasn't there some big row about if Jaffa Cakes should be VAT rated or not, or is that urban myth?

If I remember rightly the story goes that Jaffa Cakes had been VAT rated for years, when the makers applied to say they were a biscuit not a cake, despite their name. After a prolonged debate it was settled as biscuits go soft when they go stale, whereas cakes go hard. Therefore Jaffa Cakes are in fact biscuits.

This thread must get a new prize for drift, although I suppose it's still about VAT at least......

Yes, you are essentially correct. As I hinted earlier the distinction concerns the chocolate coating. Plain biscuits are zero rated as indeed are cakes, both being classed as "essentials". However chocolate covered biscuits are akin to "confectionary" and therefore seen as a luxury item and attract the standard rate of VAT. Jaffa cakes had been classed as a "chocolate covered biscuit" but this definition was challenged by the manufacturer who claimed they were "minature cakes" and should therefore be zero rated. I believe they proved this by producing a larger size one and demonstrating that in it's deterioration it performed as a cake rather than a biscuit. HMRC guidance now specifically mentions Jaffa cakes. M and S pursued a somewhat similar argument on the subject of teacakes!

 

[Jill]

I'm so pleased this has been discussed, it has saved me the embarrassment of going into Morrisons tomorrow and asking why they have wrongly charged me VAT on my ice-cream and lemonade. I was looking at my shopping receipt yesterday morning and we couldn't understand why as food items they had VAT on them. Cheers

 

[worms]

You can read the whole judgement here but the important bit is:

Although most foodstuffs are zero-rated, there are exceptions, listed in several paragraphs of excepted items in Group 1. The list of exceptions (which can be traced back to the days of purchase tax, so that its retention no doubt eased the transition to VAT on 1 April 1973) includes (para 2),

"Confectionery, not including cakes or biscuits other than biscuits wholly or partly covered with chocolate or some product similar in taste and appearance."

So a cake covered in chocolate is zero-rated, but a biscuit covered in chocolate (or chocolate substitute) is within an exception to an exception to an exception, and attracts standard-rate VAT.

Lord Foscote is of course quite wrong when he says:

Another manufacturer, Thomas Tunnock Ltd, did, in the 1990s, make comparable teacakes

I believe the Tunnocks teacake came out in the 50's and is still available. They are of course incomparable!

 

[robgil]

did you know tampons are classed as a luxury? not that i would want to dip one in my tea.

 

[LadyArowana]

did you know tampons are classed as a luxury? not that i would want to dip one in my tea.

I'm guessing that particular bit of legislation was drafted by a man, and if anyone wants to start some sort of debate about how we should be using eco friendly reuseable ones then they had better be female, sweet smelling, wearing tight jeans and riding a bicycle.

 

[FamilyWiggs]

they had better be female, sweet smelling, wearing tight jeans and riding a bicycle.

Calling Joce and Abi!

Although to be fair you could add "and carrying a chicken under her arm" to the list for Joce and "toting a gun" to the list for Abi.

 

[LadyArowana]

:roll: :lol:

 

[JoceAndChris]

Giggling at all this - how about the moon cup then, or maybe that's a digression too far for PPUK.

you know since joining their forum ive had my face book account hacked.

They are operating tight security and vetting, however I and my neighbours are all alive and well so I can't accuse them of vengefulness at the moment!

 

[LadyArowana]

Giggling at all this - how about the moon cup then, or maybe that's a digression too far for PPUK.

:lol: :lol: :lol: I think the boys might not be ready for that!

 

[skier-hughes]

Wasn't there some big row about if Jaffa Cakes should be VAT rated or not, or is that urban myth?

If I remember rightly the story goes that Jaffa Cakes had been VAT rated for years, when the makers applied to say they were a biscuit not a cake, despite their name. After a prolonged debate it was settled as biscuits go soft when they go stale, whereas cakes go hard. Therefore Jaffa Cakes are in fact biscuits.

This thread must get a new prize for drift, although I suppose it's still about VAT at least......

When my wife worked in private practise this was one of her biggest wins against HMRC, or Customs and Excise as it was back then in the old days.