When’s a flapjack not a flapjack? It’s a maddeningly difficult question

Flapjacks are tough.

In the UK, the chewy, oat-y, sticky blocks have featured prominently in two recent tax Tribunal decisions:

— DuelFuel Nutrition Limited vs HM Revenue & Customs (Judgment date: February 2nd)
— WM Morrison Supermarkets (aka Morrisons) vs HM Revenue & Customs (Judgment date: March 4th)

Being a flapjack has its advantages. Britain’s value-added tax regime slaps a 20 per cent levy on a large number of goods, but many foods are exempted. Recognised flapjacks are in this zero-rated group.

Advantages encompass being a cake or a biscuit. Most cakes are zero-rated, so long as they are not supplied in the process of catering, while biscuit zero-rating is largely about chocolate adjacency.

Being confectionery does not have advantages. This category, which includes 

any item of sweetened prepared food, other than cakes and non-chocolate biscuits, which is normally eaten with the fingers

is taxed at the standard rate.

As we have covered before, companies like things to be zero-rated.

Before we get into it, engage your favoured extremely American podcast bro voice:

Hold up, y’all — what’s a flapjack?

Americans don’t have real flapjacks, so — even by the occasionally parochial standards of our taxational reportage — this is a tough sell.

What you, American (or victim of American culinary hegemony), call a flapjack is not a flapjack, it’s a kind of pancake.

But what Britons correctly call a flapjack is, err, well…

…what is a flapjack?

At the risk of going full wedding speech, the Oxford English Dictionary calls a flapjack:

1. A flat cake or pancake; an apple turnover. [Early 17th century]
2. A sweet biscuit made with rolled oats. [Mid-20th century]
3. A powder compact. [Mid-20th century]

While Collins describes it as:

a chewy biscuit made with rolled oats

Here, via WikiCommons, is what a tray of flapjacks might look like:

A recipe for flapjacks in a tray from BBC Good Food — about as neutral an online recipe source as Britain has yet created — demands 250g of porridge oats, 125g butter, 125g sugar, and 2-3 teaspoons of golden syrup:

It occurs to Alphaville that Americans don’t have golden syrup, so we’re just gonna link this USA Today piece which says it’s “usually sold under the name of light treacle”. What a country.

Armed with this culinary knowledge, let’s proceed.

A gym enthusiast could be forced to stop selling protein bars after a judge ruled the products “aren’t served with afternoon tea”.

So began the Daily Telegraph’s write-up of the first-tier tax tribunal clash between DuelFuel, a maker of protein bars, and HMRC.

The showdown at Reading Tribunal Centre was the culmination of a long-running row between DuelFuel founder Tim Davies and the taxman.

Davies’ product is a pair of snackular bookends for gym sessions: a DuelFuel packet contains one flapjack and one protein-powder-heavy cake product, the idea being consumers would eat the flapjack for energy before working out, and the cake afterwards to build muscle.

Davies’ market research found the product should not cost more than £3 per pack, and, the judgment says, “that zero-rated VAT treatment was essential to ensure it was commercially viable”.

Acting on Davies’ behalf, Grant Thornton (no stranger to a cake-related controversy) sought clearance from HMRC for the zero rating in October 2021. Tax officials promptly requested more information.

Things did not go well for DuelFuel. In January 2022, HMRC sent Davies a decision letter, notifying him that the products were deemed to be confectionery and would be slapped with 20 per cent VAT. (FTAV tries to avoid overabundant journalese, but “slapped with” is the only acceptable construct for tax application.)

As a result, Davies shut down his operations, and appealed.

A brief visit from Columbo

“Just one more thing Alphaville, you mentioned there are two products in these packets?”

DON’T EVEN TRY IT, COLUMBO. Judgment:

We raised an issue with the parties in the hearing as to what the proper VAT treatment of the supply would be were we to decide that either the flapjack or the cake slice or brownie were standard rated and one zero rated. We expressed our tentative view there would need to be submissions on whether there was a composite or multiple supply in order for the Tribunal to decide that point. Both counsel agreed but noted that the point had not been an issue debated in the appeal and asked that the Tribunal simply decide the VAT status of the individual products and, if necessary, the parties be at liberty to bring the issue to the Tribunal.

Food, how does it work?

There is no statutory definition of the term “confectionery” or “cake”. But don’t take our word for it, here’s the DuelFuel case Tribunal judge Ian Hyde:

[There] is no statutory definition of the term ‘confectionery’ or ‘cake’.

There is, however, lots of case law.

In any complex discussion about cakes, biscuits and confectionery, the elephant in the room is Customs and Excise Commissioners v Ferrero UK Ltd.

Ferrero was victorious in its appeal that a proposed biscuit should be counted as a biscuit, rather than confectionery (as the Government wanted it classified). Lord Woolf, in his appeal judgment, wrote:

I do urge Tribunals, when considering issues of this sort, not to be misled by authorities which are no more than authorities of fact into elevating issues of fact into questions of principle when it is not appropriate to do so on an inquiry such as this. The Tribunal had to answer one question and one question only: was each of these products properly described as biscuits or not?

The Tribunal whose decision Woolf was examining had said it was relying on the “ordinary meaning” of words — that products should be categorised as they would be understood by “the ordinary reasonable man [it was the 1980s] in the street”.

In a situation where categorisation remained problematic, the Tribunal’s judgment continued, a product should be placed in the category “to which it is ‘more akin’”.

Woolf wrote:

That statement is perfectly appropriate as long as it is understood as meaning that, where there is a product which has the characteristics of two products, as long as it has sufficient of the characteristics of the product to which they are going to classify it, it can be placed in the category to which it is more akin.

If that makes your brain hurt, he provided an example:

If there is a product which, given its ordinary meaning, is properly describable as a cake and a biscuit, for the purpose of the legislation it is necessary, if it is a covered with chocolate, to decide whether it is properly characterised as a cake or a biscuit. In that situation it is in order to take the category to which it is more akin. If it has more characteristics of a cake, it is characterised as a cake. If it has more characteristics of a biscuit, it is characterised as a biscuit, but in each case it must have sufficient characteristics to be characterised as a cake or a biscuit. If it has not, it cannot be so treated.

If your brain still hurts, let’s try a tl;dr: a biscuit is a biscuit, as long as it’s a biscuit.

In a later case, Revenue & Customs v Procter & Gamble UK, Court of Appeal judge Lord Justice Jacob tried to simplify the food-group paradigm:

This sort of question — a matter of classification — is not one calling for or justifying over-elaborate, almost mind-numbing legal analysis. It is a short practical question calling for a short practical answer.

Citing these cases, and others, Judge Hyde — presiding in the DuelFuel case — writes:

We take from these cases the following principles to be applied in deciding appeals involving classifications for VAT purposes:

— (1) words should be given their ordinary meaning.
— (2) there needs to be a multifactorial assessment of a range of factors that the Tribunal considers relevant which can include not only the objective characteristics of the goods in question such as their ingredients, texture and so on but also factors such as how they are marketed, how they are perceived by the public and how they are eaten.
— (3) the test is the ordinary person’s view as to the nature of the product and whether or not the product is one which falls within the relevant category.
— (4) the precise factors to be considered and their relative importance may vary depending on the circumstances.
– (5) the question does not lend itself to extensive legal analysis but is a short practical question.
— (6) there may be features on both sides of the argument and the Tribunal should allocate the goods to the category which is most appropriate.

Let them eat… cake?

Using the framework above, Judge Hyde’s job was ostensibly simple: the DuelFuel bars could safely be considered not to be confectionery, so long as they are cake.

The parties accept there is no definition of ‘cake’ and the above principles must be applied by the Tribunal to determine whether a product is a cake within its ordinary meaning.

Despite the lack of definition as to what a cake is, HMRC has given it the old college try with its bakery products categories:

So, what did Judge Hyde consider to be the “ordinary meaning” of cake? First up, ingredients:

Applying the test of what an ordinary person would consider to be a cake we start with a conventional or archetypal cake to be something that is made from a batter containing flour and eggs and is sweet due to the presence of ingredients such as sugar, golden syrup or honey and to contain fat, normally in the form of butter, margarine or an oil. A cake is normally baked to produce an aerated sponge.

There’s plenty to contend with here (especially if you’re a vegan or gluten intolerant), but, OK — “conventional or archetypal” — sure.

For context, here are the ingredients in the brownie/cake slice part of a DuelFuel packet:

Ingredients aren’t everything, though. There’s also perception, says Judge Hyde:

An ordinary person would consider a typical cake to be a high calorie food eaten as a treat whether sitting down with a cup of tea, after a meal or during a children’s birthday party or standing up at a social function, perhaps a party or celebrating a birthday at work. An ordinary person would also expect a cake to be something eaten by all generations.

Eh? These contexts seem… bizarrely limiting. If you grab a coffee and a brownie and go for a walk in a park, is that not “ordinary”? And why would you expect most cakes to be eaten “by all generations”? Nobody under the age of 60 likes Christmas cake.

Anyway, Judge Hyde accepts that “the conventional cake can only be a starting point”.

On to the flapjacks. Judge Hyde writes, ominously:

The concept of a flapjack has a problematic position in the categorisation of cakes for VAT purposes.

In a flap

We’d like to direct readers to VFOOD6200, part of HMRC’s internal manual on VAT. Or, to give it is full name:

VFOOD6200 – Excepted items: Confectionery: The bounds of confectionery, sweets, chocolates, chocolate biscuits, cakes and biscuits: The borderline between confectionery and cakes

Its author writes:

In most cases, the borderline between cakes and confectionery causes few problems, but there are products whose status as cakes is not self-evident.

Flapjacks are the chapter’s biggest concern. Here’s an extract (our emphasis):

At the inception of VAT, traditional flapjacks were widely accepted as cakes of common perception. This was not because of any specific reasoning behind such factors as their recipe, ingredients, or the manufacturing process. HMRC accepts that traditional flapjacks can be zero rated.

However, there is a difference between traditional flapjacks – made of oats, butter and syrup – and cereal bars and energy/sports nutrition bars, which were not widely available, if at all, when VAT was introduced into the UK. Since that time, the difference between flapjacks on the one hand and cereal bars and energy/sports nutrition bars on the other has narrowed.

HMRC defines flapjacks “narrowly” — and says that “a traditional flapjack consists of oats, butter and syrup” (it looks like the BBC recipe would pass). It allows certain additions like dried fruit and chocolate chips, but adds, citing two court rulings:

The addition of other cereals or other non-traditional ingredients such as protein powder, vitamins and minerals, added fibre, or multiple additions/variations means that it is no longer a traditional flapjack. We don’t accept a flapjack can be zero rated if alterations take it into the category of being a cereal bar or energy/sports nutrition bar…

Where it is unclear as to whether a product is a traditional flapjack, a more detailed assessment will need to be carried out to determine whether it is a cake in line with the established legal approach.

So, to tl;dr again: a flapjack is a flapjack unless it’s a cake or a cereal bar, which may be because it’s an insufficiently trad flapjack.

Here are the ingredients for the flapjack part of a DuelFuel packet:

Those look safe enough… but if Alphaville were trying to get a cake slice and flapjack zero-rated, our reaction to the ‘a flapjack is kinda cake’/‘and you only eat cake at your grandma’s birthday party’ context above would be roughly:

It appears Davies’ counsel, Max Schofield, sensed the threat. Judge Hyde:

Mr Schofield resisted HMRC’s argument that flapjacks were a different kind of cake. HMRC have accepted they are cakes (see VAT Notice 701/14 at 3.4 and HMRC’s Manual VFOOD6200). Notwithstanding the Tribunal’s comments in Bells of Lazonby at [13] that flapjacks are at the borderline of cake, the ordinary consumer would not question the presence of a flapjack slice next to a Victoria sponge whether on a stall at a village fête and baked by the Women’s Institute or in a display cabinet in a coffee shop next to a millionaire square and a rocky road slice.

Have your cake…

Thus begins the multifactorial assessment, in which the question “is this a cake/flapjack?” is posed in a variety of contexts.

First up, naming. It’s unclear why this was even made a category because nobody thinks it matters.

Next, ingredients. Judge Hyde claims cakes “would be considered by the ordinary person to be a relatively high-calorie food”, and adds:

Cakes can contain different ingredients, for example different flours and preservatives, indeed many products accepted as cakes do not contain flour at all. However, the further a product departs from the conventional cake the less likely an ordinary person would see it as a cake.

The DuelFuel cake slice is doing a lot of things the judge considers uncakeylike: using protein powder instead of flour; oil, water and syrup instead of good old-fashioned butter and eggs; and — horror of horrors — putting vitamins and minerals in. He writes:

In our view an ordinary person would not associate high protein levels with a cake. We do not find the use of the other ingredients as significant but, to the extent all of these ingredients are intended to make the product healthier, this points away from them being cakes.

The flapjack, as expected, makes it through this stage safely.

Next, manufacturing. They’re baked like cakes.

Next, size and appearance. Cakey. Flying colours for both.

Next, taste and texture. Davies brought some examples, but:

The Tribunal was advised that the use by date on the Products had expired over a year ago and the panel might choose not to taste the Products.

Julian Stafford, who was advising the judge on tax matters, was undeterred. As Judge Hyde wrote:

134. I did not try the cake slices or brownie due to bovine collagen being an ingredient but Mr Stafford, with allowance given for the Products having deteriorated since being manufactured, found the cake to be cake-like but heavier than he would like if he were eating them as a treat. He also found the consistency to be rather denser than he would have expected and that there was a slightly unpleasant mouth feel and dryness.

135. We both tried the flapjack and found it to be flapjack like, sweet and with an oaty consistency. Mr Stafford felt the flapjack suffered from similar defects to those affecting the cake slices and brownies.

136. There were clearly limitations in testing products long past their use by date. However, we find that they were edible but, the even taking into account their being stale, Mr Stafford did not find the cake, flapjack or brownie to be of a standard to be served to guests as a treat with afternoon tea and I agree as regards the flapjack.

This is… absurd, right? That isn’t just a comment on whether the approach is right: it’s just a patently absurd occurrence. Two fully-grown men eating a year-out-of-date flapjack and speculating on whether it was up to “afternoon tea” standards. What a country.

It is also, well, legally absurd. Why does something being up to afternoon tea standards matter? If you buy a bad cake, should you go back to the shop and demand they charge you VAT?

Next, packaging. Not what you’d normally expect for a cake, the Judge reckons.

Next, marketing. By targeting adult gym goers, primarily through its website and gym, DuelFuel packets were deemed uncake.

Finally, circumstances of consumption. Citing the same cake-is-for-parties-and-social-functions logic as before, Judge Hyde writes:

we do not find that the Products would be eaten in the typical circumstances where cakes might be eaten as part of a non-exercise related occasion. They are designed for eating immediately before and after vigorous exercise and, by their ingredients and marketing, not as a cake which might be eaten by consumers of all generations.

Scores on the doors after that process:

The nays had it. Judge Hyde:

Applying the multifactorial test and weighing all the relevant factors we find that the Products are not cakes within the meaning of Excepted Item 2. In our view they look and have the appearance of cakes but the ingredients, taste, packaging, marketing and pattern of consumption of the Products are such that an ordinary person would not consider them cakes.

We have a lot of thoughts about this process, but the decision is the decision. The question became this: if DuelFuel bars aren’t cakes… what were they?

If the answer was an otherwise uncategorisable food, then the products would be zero rated. But, if they were deemed confectionery — 20 per cent tax. The stakes were high.

We’re nearly six years into the snack war between Morrisons and HMRC.

The supermarket made a set of three appeals to the first-tier tax tribunal in 2018, saying several products it stocked — which HMRC had classified as “confectionery” — should receive different treatment.

The products in question were made by two companies: Organix Brand Limited, which trades as Organix; and Natural Balance Foods, which trades as Nakd. Categories/names:

— Fruit and nuts bars: Nakd Berry Delight Wholefood Bar, Nakd Berry Cheeky Wholefood Bar, Nakd Berry Bliss Breakfast Bar, Nakd Peanut Delight Wholefood Bar and Organix Banana Soft Oaty Bar.
— Bars that emulate desserts, biscuits or cakes: Nakd Blueberry Muffin Wholefood Bar, Nakd Cashew Cookie Wholefood Bar, Nakd Bakewell Tart Wholefood Bar, Nakd Lemon Drizzle Wholefood Bar, Nakd Gingerbread Wholefood Bar, Nakd Apple Pie Wholefood Bar, Nakd Banana Bread Breakfast Bar and Organix Carrot Cake Soft Oaty Bar.
— Crunch bars: Nakd Banana Crunch Wholefood Bar and Nakd Strawberry Crunch Wholefood Bar.
— Bars that emulate sweets or chocolate products: Nakd Rhubarb & Custard Wholefood Bar, Nakd Cocoa Orange Wholefood Bar, Nakd Cocoa Delight Wholefood Bar, Nakd Cocoa Twist Breakfast Bar and Nakd Cocoa Loco Wholefood Bar.

Here, as an example, is how one of these products is marketed:

Morrisons’ appeals were subsequently consolidated into one, and heard in early 2021. A first-tier tax tribunal judge, Judge Redston, ruled that the products were all confectionery, and none of them cake.

Morrisons appealed this ruling, claiming Judge Redston had “wrongly treated certain factors [as] irrelevant” (in this judgment’s wording).

The Upper Tribunal, accepting the appeal, said the initial tribunal had failed to consider the healthiness of the products, and their use of ingredients not associated with traditional confectionery.

Be sweet to me

The rules laying out what confectionery means for the purposes of standard rating say:

…‘confectionery’ includes chocolates, sweets and biscuits; drained, glacé or crystallised fruits; and any item of sweetened prepared food which is normally eaten with the fingers.

Most cakes and many biscuits, you’ll recall, are safe from being put in this category.

The judge in this case, Greg Sinfield, notes — much as Judge Hyde did in the DuelFuel case — that confectionery is “not exhaustively defined” in VAT legislation.

First up: another lil bit of case law! 🤠 HMRC v Premier Foods Ltd (2007) is an epochally important case that considered whether a fruit bar was confectionery. It was concluded that a product did not need to be cooked, or to have a form of sweetener added, in order to be confectionery.

Armed with that context, everyone cracked out their dictionaries again. As you might expect, the answers given were similar, but also different enough to be problematic in this specific context:

(1) Oxford Dictionary of English (3rd edition): “sweets and chocolates considered collectively”.
(2) Google Dictionary online: “sweets and chocolate considered collectively”;
(3) Cambridge Dictionary: “sweets or chocolate”;
(4) Collins Dictionary: “Confectionery is sweets and chocolates”;
(5) Oxford Learner’s Dictionaries: “sweets, chocolate etc”;
(6) Chambers 21st Century Dictionary: “sweets, biscuits and cakes”.

In addition, the OED describes confectionery as:

Things made or sold by a confectioner; a collective term for sweetmeats and confections.

Naturally, this description prompted visiting several other pages of the dictionary:

Christ.

On top of… all that… we have the things specified in the VAT act. So what definition should we use?

Well, a bit of a mix of everything, Judge Sinfield reckons:

Applying the legislation, the guidance in the cases and the dictionary definitions as well as considering the nature of items that are indisputably confectionery, we consider that ‘confectionery’ means items of food that:

(1) have been produced by a process of mixing or compounding (but not necessarily cooking) the ingredients;
(2) taste sweet, either as a result of the inherent sweetness of one or more ingredients or as a result of the addition of sweetening, and whether or not they also taste bitter, salty, sour or spicy; and
(3) are normally eaten with the fingers in small quantities as a snack or a treat and not as a main meal or part of one.

He added:

We accept that it is possible that not all processed sweet snack foods are ‘confectionery’ but consider that all confectionery comes within the term ‘sweet snack’. In our view, there is a continuum of sweet snack foods running from items that are undoubtedly ‘confectionery’ at one end of the scale to items that are incontrovertibly not ‘confectionery’ at the other.

For example, sweets and chocolates are obviously ‘confectionery’ while raisins and other dried fruits are not ‘confectionery’ notwithstanding that they fulfil a similar function as a sweet snack. In between the extremes, are items which have some of the attributes of ‘confectionery’ but lack others and so the classification is less obvious.

Sugar (do do doo do doo doo)

Citing Woolf, Judge Sinfield also went for the “ordinary person in the street” approach. Once again, it was time for a multifactorial assessment.

At this point, we might as well acknowledge that we’re roughly 3,800 words into a piece about VAT treatment. Alphaville hugely values your patience and continued attention.

Because of that appreciation, we’re not going to break down the multifactorial assessment of these twenty distinct snack bars in great detail. Instead, let’s run, saccades-style, through some of the shared qualities that the (presumably hyperglycemic) Tribunal panel identified:

All the Products are in the form of rectangular bars of a similar size, roughly 10 x 4 cm. The size is similar to small chocolate bars and filled chocolate and wafer bars…

…the Products are clearly intended to be eaten with the fingers by an adult or with the hands in the case of a small child…

…The Products have an energy density that is similar to many confectionery bars…

…all of them taste sweet which is unsurprising given the levels of natural sugars they contain…

…The Products taste of their principal ingredients and/or flavourings…

…No samples were provided of [six of the bars]. As no samples were provided, we were unable to form a view on those bars individually but conclude that they shared many of the same properties in terms of appearance, texture and taste as those bars which we sampled and there were no grounds to treat them differently…

…The statements by the manufacturers and retailers emphasise that the Products are (in the view of those making and selling them) ‘healthy snacks’ made from natural rather than artificial ingredients.

Preparing to conclude, Judge Sinfield cited that familiar quote from Procter & Gamble:

This sort of question – a matter of classification – is not one calling for or justifying over-elaborate, almost mind-numbing legal analysis. It is a short practical question calling for a short practical answer.

Which seems to call for the tax tribunal judge equivalent of “I know it when I see it”.

Morrisons did not come out on top:

We consider that the importance of the look, feel and taste of the Products outweighs any other factors that might suggest that they are not.

At this point, Deloitte’s Valentina Sloane, acting on behalf of Morrisons, had just one play left.

The cake escape (on flapped feet)

Judge Sinfield:

We can deal with Morrisons’ alternative argument that the Products are ‘cakes’ as it was dealt with before us, ie very shortly.

Sloane, running out of options, tried the claim the bars were cakes. In case your brain has fully jellified at this point, successfully doing so would snatch victory from the jaws of defeat, leaving the products zero rated:

Ms Sloane contended that the ‘lexicon’ of confectionery-related terms used in marketing the Products, which were relied on by HMRC as indicating that the Products are confectionery, in fact suggested that they were ‘cakes’.

Judge Sinfield was having none of it, citing the finest quote from the recent poppadom case, Walkers Snack Foods Ltd v HMRC:

Nominative determinism is not a characteristic of snack foods

“We agree,” wrote Judge Sinfield. “Simply calling something a cake does not make it a cake.”

He acknowledged that there were similarities between the bars in question and certain cakes, but that the ingredients were too dissimilar, and:

The taste, texture, mouthfeel and appearance of the Products is thus wholly different from that of a dark fruit cake which is the nearest cake comparator.

Defeat appeared inevitable. In apparent desperation, Sloane suggested that the Organix bars might be flapjacks.

“Give up,” said Judge Sinfield (we paraphrase).

Morrisons had been defeated — did DuelFuel manage to escape the confectionery trap?

No

No they did not.

Preparing for a multifactorial test of whether the DuelFuel products are confectionery, HMRC’s counsel raised the Premier Foods ruling, and (yay, circularity) the Upper Tribunal’s ruling in the Morrisons case!

As a reminder, those together say confectionery:
— need not have sweetness added
— need not be cooked
— need not contain any “traditional” ingredients

But that:
— “healthiness” can matter
— consumption context matters

Scores on the doors this time…

It’s a bind. Judge Hyde fell back on another case, Bells of Lazonby Ltd v Revenue & Customs (2007), which, in HMRC’s phrasing) “decided that a cereal bar which was not sweetened was an item of confectionery per se”.

“We are left in a similar position,” Judge Hyde said, as the judge in that case, Colin Bishopp, found himself in. Judge Bishopp wrote:

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. The fact that it is so treated while cakes are zero-rated is one of the unreal results at which the tribunal hinted in Procter & Gamble UK (2007, Decision 20205) at paragraph 9.

Examination of the two lists, of zero-rated and standard-rated products, set out in the Public Notice shows little logic in the distinctions between the two categories. Why, to take the example we have already mentioned, “crunch cakes” should be zero-rated while Florentines are standard-rated is a mystery which we are, fortunately, not required to solve.”

Judge Hyde had had an awful lot to consider. And, for DuelFuel, it roughly boils down to:

Actually, his message to DuelFuel is confusing. We’re going to emphasise two bits here that we don’t think are supposed to be contradictory, but seemingly are:

…we have to apply the legislation as it is and applying the multifactorial test we find that an ordinary person would find that the Products are not confectionery within the meaning of Excepted Item 2.

DECISION

217. We find that the Products are not cakes for the purposes of Excepted Item 2 of Group 1 of Schedule 8 VATA.

218. Further, we find that the Products are deemed to be confectionery within Excepted Item 2 by virtue of Note 5 to Group 1. However, for completeness we do not find that the Products are confectionery on general principles.

We’re not sure if we’re too dumb to understand the distinction here, or if (like us) Judge Hyde was just getting very tired at this point and made a typo.

Whatever it is supposed to mean, DuelFuel lost: its products are confectionery enough to be confectionery.

Cleaning up the crumbs

The FT’s spellchecker allegedly breaks around 5,000 words, so we won’t waste any (more).

Tim Davies, DuelFuel’s founder, is not happy with the outcome. He told Alphaville:

The potential implications for all actors in the food and drink supply chain are considerable; the DuelFuel Tribunal decision could embolden HMRC to reclassify food with functional benefit and subject it to VAT, which – given the current cost of living crisis – will drive less affluent consumers to cheaper and less healthy alternatives.

Davies said he’d been contacted by someone from a multinational food company, who suggested HMRC may try to tax protein shakes as a result of this decision. Davies said he is not sure DuelFuel can afford to appeal further.

Moreover, it’s clear that cakes and flapjacks currently occupy a deeply weird place in UK tax law — how much that matters is an open question, but we’re unconvinced that such a limited conception of cake can hold forever. Let a thousand sponges bloom, say we.

Even moreover, thank you for reading.