- The Court of Appeal upheld HMRC’s appeal regarding VAT treatment of Mega Marshmallows.
- The case was remitted back to the FTT for a new hearing.
- The original FTT ruled Mega Marshmallows were not confectionery, thus zero-rated.
- The FTT based its decision on marketing, packaging, size, supermarket positioning, and sales fluctuations.
- The FTT did not give weight to Note 5, which includes items normally eaten with fingers as confectionery.
- HMRC argued the FTT erred by not considering this test.
- The UT agreed there was an error but deemed it not material.
- The Court of Appeal disagreed, stating if a product fits Note 5, it is standard-rated.
- Two routes for HMRC: Mega Marshmallows as confectionery by ordinary understanding or as sweetened food eaten with fingers.
- The FTT concluded Mega Marshmallows are not ordinarily understood as confectionery due to roasting.
- The Court of Appeal suggested ordinary people might still see them as confectionery despite size and roasting.
Source: claritaxnews.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
