Key Facts
- •DuelFuel Nutrition Limited appealed HMRC's decision to standard-rate their sports nutrition products (a flapjack and a cake bar/brownie) as confectionery.
- •The products were marketed towards adults engaging in strenuous exercise, emphasizing nutritional benefits.
- •HMRC argued the products were standard-rated confectionery, while DuelFuel contended they were zero-rated cakes.
- •The Tribunal considered various factors including ingredients, manufacturing process, appearance, marketing, and intended consumption.
Legal Principles
The words 'confectionery' and 'cake' in VATA should be given their ordinary meaning, determined by a multifactorial assessment.
Ferrero UK Ltd, Lees of Scotland Ltd & Thomas Tunnock Ltd v HMRC, HMRC v Procter & Gamble, HMRC v The Core (Swindon) Limited
Note 5 to Group 1 of Schedule 8 to VATA expands the definition of 'confectionery' to include 'any item of sweetened prepared food which is normally eaten with the fingers'.
VATA 1994, Schedule 8, Group 1, Note 5
In interpreting Note 5, the Tribunal considered whether it was an inclusive definition or a deeming provision and the implications of applying the ejusdem generis rule.
Bennion on Statutory Interpretation, WM Morrison Supermarkets Plc v HMRC, Pulsin
Outcomes
The appeal was dismissed.
The Tribunal found the products were not cakes but were deemed confectionery under Note 5 to Group 1 of Schedule 8 to VATA.
The products were not considered cakes.
A multifactorial assessment, considering ingredients, manufacturing, appearance, marketing, and consumption, indicated that an ordinary person would not classify them as cakes.
The products were deemed confectionery under Note 5.
The Tribunal interpreted Note 5 as an inclusive definition, expanding the scope of 'confectionery' to include sweetened prepared food normally eaten with the fingers, regardless of whether it resembles traditional confectionery.