The number of VAT Tribunal Cases involving food items, and the illogical nature of the VAT legislation has led to comments from many that VAT legislation in respect of food is no longer fit for purpose.
Perhaps to illustrate this point along comes the Marks and Spencer’s Strawberries and Creme sandwich.
Articles about the product itself have shown that opinions are divided with some calling it the “sandwich of the year” and others horrified that a sandwich could contain fruit (the product is based on the fruit sando which is very popular in Japan).
Is it a Sandwich, a Cake or is it Confectionary?
It is understood that Marks and Spencer are treating the product as being zero rated for VAT purposes as they would with any other sandwich that they sell.
However, some advisors (seem to be jumping the gun rather than waiting for the inevitable tribunal case) are suggesting that it is possible that HMRC will argue that the product is confectionery because it is a sweetened product which is eaten by the fingers.
Others are stating that it is more like a cake in nature (which would also be zero rated).
The ingredients might be enough to argue that it is not a cake. However, the product looks fairly substantial and though it will be eaten in the hand, does not appear to be finger food (such as sweets in the traditional sense). Whether this will be sufficient to say that it is not confectionery remains to be seen.
Whatever the outcome, the issue does indeed indicate that the VAT legislation for food is not fit for purpose. In the meantime, Marks and Spencer do seem to have an interesting hit on its hands ready for Wimbledon.