A British court this summer examined a bag of 27 marshmallows and considered the future of soft, sweet treats. Are these marshmallows destined to be eaten straight from the bag or destined to be s’mores?
The question may seem simple, but the tax court presented with the sweets may ask the tax court to determine if a food product called a mega marshmallow is subject to the same standard retail sales tax as regular marshmallows. was evaluated in detail. Half an inch thin.
A court known as the First-Tier Tribunal investigated past and present Mega Marshmallow packaging, noting that one version included a cartoon chef next to the words “baking buddy.” It was speculated that people were more likely to roast marshmallows over an open fire than eat them as a snack. Marshmallows tasted better raw or roasted.
“The larger marshmallows are equally delicious whether eaten as a snack or after roasting,” the court ruled. Arbitration on page 9 Published last month.
Court decisions are very detailed. Explaining the citation regarding marshmallow packaging, the court said, “A reference to the Great American Tradition refers to the tradition of roasting marshmallows over a campfire.
After an intensive court deliberation, the marshmallow maker Innovative Bites Limited finally won. Innovative Bites Limited was authorized to sell Mega Marshmallows with his 0% Value Added Tax (VAT).
The court said that unlike standard marshmallows, which are subject to 20% VAT, these slightly larger marshmallows are not confectionery and should be subject to 0% VAT like most food products. I was.
“The fact that it is marketed and purchased as a product specifically for roasting, the marketing on the packaging of the product confirming its purpose, the size of the product specifically suited for roasting, and the fact that it is located in supermarkets. The aisle of the barbecue section during the summer months, where the sale of scallops, and the aisles of the world food section otherwise, lead to that conclusion,” the court said.
The UK and other countries use VAT to sell food, games, TV personality Decide how to tax.
The UK tax collector, HMRC, has issued VAT guidelines, but there are many gray areas that leave companies to challenge its ruling.
in AprilIn 2017, the European Court of Justice ruled that card game bridge is not a sport and is an addition It was ruled that it was subject to value tax.
Perhaps the best known is Jaffa Cake, a spongy cookie layered with jam and coated with chocolate. In 1991, the National Tax Agency unsuccessfully objected to designating the cake as a cake, so Jaffa cake is not subject to sales tax.
“The Jaffa cakes had characteristics of both cakes and biscuits, but the court considered them to have sufficient characteristics of cakes to be accepted as such. The UK government said in its guidance:.
Rita de la Feria, a professor of tax law at the University of Leeds, said: “There is no good basis for any of these, as these rules are not conceived for the gray area.”
Professor de la Feria said tax breaks on certain products are intended to protect consumers by lowering the cost of foods considered more valuable. Cream is taxable, vegetables and fruits are exempt.
In reality, if the tax on a product is reduced, it is the manufacturer who gets the profit because the company can either keep the price of the product the same and make more profit after the tax cut, or sell more at a lower price. Yes, and those who benefit most from tax cuts on goods are those who consume the most.
Professor de la Feria says courts and tax authorities spend a lot of time and taxpayers’ money debating how often people eat marshmallows and under what circumstances they consume marshmallows. said it made no sense.
This kind of intense scrutiny of snacks, biscuits and cakes will continue to go through British courts unless the tax regime changes, she said.
“Two years from now, even if there are large marshmallows that people buy off the shelf and don’t use as s’mores, they’re still eligible for the discount rate until HRMC decides, ‘OK, this isn’t the same. Let’s take the matter to court,” she said. “It may take another decade to make such a decision.”