Key Facts
- •Appeal concerning the VAT treatment of fruit and nut bars manufactured by Organix and Nakd and sold by Morrisons.
- •The key issue is whether these bars are 'confectionery' under Schedule 8 of the Value Added Tax Act 1994, impacting VAT rate (standard or zero).
- •The Tribunal considered a multi-factorial test, including ingredients, manufacturing process, appearance, taste, consumption method, marketing, and consumer perception.
- •The Upper Tribunal (UT) remitted the case back to the First-Tier Tribunal (FTT) to reconsider the 'healthiness' of the products and the absence of traditional confectionery ingredients.
- •The FTT conducted its own taste test and considered additional evidence.
Legal Principles
The meaning of 'confectionery' in VAT legislation should be interpreted according to its ordinary and natural meaning, considering factors like ingredients, manufacturing process, appearance, taste, and consumption.
Value Added Tax Act 1994, Schedule 8; C&E Commrs v Ferrero Ltd [1997] STC 881; HMRC v Premier Foods Ltd [2007] EWHC 3134 (Ch); HMRC v Proctor & Gamble UK [2009] EWCA Civ 407; HMRC v SSE Generation Ltd [2023] UKSC 17
A multi-factorial test should be applied, weighing various factors to determine whether a product is 'confectionery'. Look, feel, and taste are particularly important.
HMRC v Proctor & Gamble UK [2009] EWCA Civ 407; Ferrero
Note 5 to Group 1 of Schedule 8 is clarifying, not a deeming provision. It expands the definition of confectionery but doesn't alter its core meaning.
Bennion, Bailey and Norbury on Statutory Interpretation (8th edn)
Outcomes
Appeal dismissed.
The FTT found that the products met the criteria for 'confectionery' based on their appearance, texture, taste, and consumption method, outweighing arguments about ingredients or marketing as healthy.