Mega Marshmallows: Confectionery or Not? Court of Appeal Rules

• Innovative Bites Ltd argued that Mega Marshmallows were not confectionery because they were intended for roasting or use in s’mores, not as snacks.
• HMRC argued that Mega Marshmallows were confectionery and subject to VAT.
• The First-tier Tribunal and Upper Tribunal ruled in favor of Innovative Bites, finding that Mega Marshmallows were not confectionery based on a typical customer’s perspective.
• The Upper Tribunal held that Note 5 of Group 1, Schedule 8, VATA 1994 is not a “deeming provision” but rather a “rebuttable presumption” and an inclusive definition.
• The Court of Appeal overturned the previous rulings, finding that Note 5 is conclusive and that products described in Note 5, including “sweetened prepared food which is normally eaten with the fingers”, are confectionery.
• The case was remitted to the First-tier Tribunal, where the burden will be on Innovative Bites to prove that Mega Marshmallows are not normally eaten with the fingers or are not confectionery as understood by an ordinary person.

Source: taxscape.deloitte.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.

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