HMRC has updated VAT Notice 701/14 to clarify whether Scottish snowballs are liable for VAT.
The notice provides that most “food of a kind used for human consumption” is zero-rated, but that there are some exceptions. In 2014, HMRC challenged the zero-rate on Scottish snowballs relying on a previous decision which had considered Swedish snowballs to be liable for VAT. However, the first tier tax tribunal in Edinburgh dismissed HMRC’s challenge. It found that, although not everyone would consider a snowball to be a cake, it looks like a cake and would not look out of place on a plate of cakes. Moreover, the snowball shared other characteristics with a cake, namely the ‘mouth feel’ and the difficulty of consuming it whilst walking or in the street.
HMRC has therefore confirmed in the notice that Scottish snowballs, defined as “a dome of marshmallow coated with chocolate or coconut, aerated and boiled (not baked), they have a short shelf life and harden rapidly when removed from the packet”, are not liable for VAT.
This article appears in the JHA December 2015 Tax Newsletter, which also features:
