Key Facts
- •Appeal against HMRC's decision that Walkers' Sensations Poppadoms are standard-rated for VAT.
- •Products contain potato granules, potato starch, and modified potato starch.
- •Walkers argued for zero-rating under Item 1 of Group 1, Part II, Schedule 8 VAT, and fiscal neutrality.
- •HMRC argued the products fall under Excepted item 5 of Group I, Part II, Schedule 8 VAT as 'similar products made from the potato, or from potato flour, or from potato starch'.
- •Dispute centered on whether the poppadoms are 'made from' potato and whether they are 'similar products' to potato crisps.
Legal Principles
Excepted item 5, Group I, Part II, Schedule 8 VATA 1994: Standard-rates for VAT purposes apply to certain potato-based snack foods packaged for consumption without further preparation.
VATA 1994
Fiscal neutrality: Similar supplies should be treated similarly for VAT purposes to avoid market distortion.
CJEU case The Rank Group Plc v HMRC
'Similarity' involves a multifactorial assessment of all relevant factors, considering the overall impression.
Court of Appeal in Pringles (Proctor & Gamble UK [2009] EWCA Civ 407)
Outcomes
Appeal dismissed.
The Tribunal found the products contain approximately 40% potato-derived ingredients, fulfilling the 'made from' criteria of Excepted item 5. A multifactorial assessment determined the products are similar to potato crisps based on packaging, appearance, texture, and sales context. No breach of fiscal neutrality was found.