In the VAT world this is hot news, as it poses the question as to whether it is truly a sandwich or whether in fact it is more akin to a dessert? By way of a refresher, typically food, including cold sandwiches which are not supplied in the course of catering, are zero rated. However, confectionery is always standard rated. The VAT legislation refers to ‘confectionery’ as including chocolates, sweets, and biscuits; drained, glacé, or crystallised fruits; and any item of sweetened prepared food which is normally eaten with the fingers.
When looking at the ingredients in this ‘sandwich’, they include strawberries of course, but also ‘whipped cream cheese on a sweetened bread’. Just to add to the dilemma, it is described as ‘looking like a dessert…but you’ll find it with the rest of the sandwiches. Would this normally be eaten with the fingers?
Over the past few years, we have seen several tribunals regarding ‘food’ and whether the VAT rate applied to the sale of those ‘food’ items is correct or not. Cases such as Poppadom’s, which were advertised as food and therefore zero rated as opposed to a crisp and being subject to VAT at 20%. We also saw that some fruit bars were deemed to be confectionery and that ‘mega marshmallows’ may be deemed to be food and zero rated after all, time will tell.
Despite all the facts surrounding the ingredients, advertising material, method of consumption etc. the Tribunal tends to consider what the “ordinary person” on the street would deem the products to be? It reminds us of the Jaffa Cake case from many years ago which argued whether they were a cake and zero rated or a chocolate covered biscuit and subject to VAT at 20%. The conclusion was that these are cakes, however the irony is that if you wish to buy them in a supermarket you would normally find them in the biscuit aisle!
Whatever your business, be it goods or services, confectionery, or sandwiches, we strongly recommend you consider how VAT impacts your business and where you have any concerns seek professional advice.