There’s so much to love about a good brownie. And, if you serve us a toothsome wedge which hits that sweet spot between gooey and sugar crust, well, we’d die happy. But, as with all things in life, brownies are the most recent foodstuff to be involved with the “to VAT or not to VAT” question. Before we get to the molten heart of the brownie tax matter, let’s get a bit of context for clarity.
The Hard-Baked Brownie Tax Facts
This is all fallout from a little something called The Biscuit Tax. Simply put, when VAT was established in this fine land, the powers who be decided that only “luxury” foods should be subject to tax. It was felt that everyday, “wholesome” foods that families would normally make at home should not be taxed. And back then, cake was felt to be an “essential” item. Bless them. (They obviously hadn’t tried mom’s Death By Biscoff Chocolate Cake.) The long and the short of it was fancy biscuits (aka chocolate-covered biccies) were considered confectionery. They were something that, at the time, was usually bought from the shop and therefore counted as a “luxury” or “confectionery” item. However, it’s important to remember that opinions about luxury and everyday were a little bit different back in 1973. A line had to be drawn somewhere, and for HMRC this was the biscuit.
We Like a Little Chocolate on Our VAT Biscuit
So you’ve got yourself a sticky situation here. It wasn’t long before lines started to get blurry. What could be classed as an essential foodstuff and what was taxable “confectionery”? Big men got together to discuss, and guidelines were made. Taxable confectionery generally is:
- Made or sweetened with sugar.
- Usually eaten with fingers instead of a spoon or fork.
- Dipped in, or heavily features, chocolate.
- Would be considered a “treat” or “snack”.
Enter the Jaffa Cake.
Have Your Tax-Free Jaffa Cake and Eat It
We’ve probably all heard about the Jaffa Cake controversy (it’s definitely a cake), but back in the 90s this crowd-splitting argument made headlines due to the court case which came about regarding whether or not this humble baked good should be taxed. If the judge ruled it a biscuit, it would be bad news for McVities. Happily, due to very specific criteria, the Jaffa Cake was officially pronounced a cake. A ruling McVities takes very seriously to this day, as demonstrated by this recent Guardian article.
The Way The Next Tax Cookie Crumbles
It was only a matter of time before the humble yet moist brownie came under similar scrutiny. 2018 saw the historic Pulsin Raw Brownies vs HMRC court case. After paying the big bad brownie tax for many years, someone had the similar Jaffa cake existential question: are we a biscuit or a cake?
As you can see from the list of what classes as a piece of confectionery, the initial result seemed doomed. However, arguments were brought before a judge, and in the spirit of a Jaffa Cake resisting a softening stale, Pulsin prevailed. Their brownies tasted extra sweet with their new VAT-free status.
Not As Easy As Pie
Why does any of this matter? Well, it could win you the next pub quiz. But if you’re in the food industry, it could also mean the difference between paying tax on some of your baked goods and not on others. The world of food tax and VAT is a messy one. We recommend working closely with a qualified accountant to steer you through the complex classification of what needs paying VAT and what’s exempt.
If this is something you think might apply to you, stay with us for our next blog instalment: Spicy Tax Tips for Food Preparers. And in the meantime, go ahead and enjoy a second helping of that Vat-free brownie (see what we did there?).
