The case
The main issue was whether 36 different varieties of a flapjack/cereal bar product made by Glanbia Milk Ltd (G) were classed as a zero-rated cake or a standard-rated item of confectionery. The judge noted that the main ingredients were oats, syrups and protein. He tasted a sample of four items, noting that the products had a “crunchy rather than chewy texture” , which was not consistent with eating a cake. He also noted that the packaging made no mention of the word “cake”, focusing on the link to sports nutrition because of the high protein content.
The law
Most foods items are zero-rated. However, there are exceptions to the zero-rating; exceptions to the exceptions; and exceptions to the exceptions to the exceptions. A cake is zero-rated but confectionery items are standard-rated.
The decision
The judge considered how an ordinary reasonable person in the street would view the product and how contestants in a game show would describe it if they had to shout out what it was when it was held up before them. The appeal was dismissed on the basis that the products “do not have sufficient characteristics of a cake to fall within the definition of a cake for the purposes of that provision.” Even though HMRC’s guidance listed a flapjack as a zero-rated product, the correct definition was that the products were “bars, fruit bars or cereal bars”.
An important message from this case is that it can be very dangerous determining the VAT liability of food and drink products by using HMRC’s manuals and public notices. As the judge noted, they do not have the force of law, only HMRC’s interpretation of the law. This product did not qualify as a “flapjack” where zero-rating could have applied.
Glanbia Milk Ltd v HMRC [2022] TC8439/V
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