In 1991, Jaffa Cake took on HMRC, arguing that their product was indeed a cake and not a biscuit. It may seem an innocuous point, but the latter definition would relieve them of tax. Luckily for McVities, the court sided with them.
Nearly 30 years later, M&S find themselves embroiled in a similar scenario with their launch of the “strawberries and creme” sandwich, inspired by the Japanese 7-Eleven stalwart. The sandwich consists of fresh fruit and cream between two slices of sweetened white bread, and is retailing for £2.80.
The sandwich has gone viral, but one financial expert has suggested it could land the retailer in hot water with the taxman.
HW Fisher’s VAT manager Simon Knivett said such a sandwich could be subject to a 1980s legislative amendment, meaning Marks would have to pay additional VAT on it. “If the bread is sweetened and designed to be eaten with fingers, the case for classifying it as confectionery is surprisingly strong,” he said.
HMRC defines a dessert as: “Any form of food normally eaten with the fingers and made by a cooking process, other than baking, which contains a substantial amount of sweetening matter.”
Whereas a sandwich is “a filling, often including meat, cheese, vegetables, or sauces, placed between two slices of bread, or a single slice of bread topped with these fillings”.
These typically achieve “zero-rated tax” status through being served cold.
It seems, then, that the Japanese-inspired staple is unironically sandwiched by two opposing sets of food legislation, filled by a litigious grey area. Is the strawberry sandwich a well-meaning attempt to import a favourite or a neatly packaged attempt at tax efficiency? M&S have yet to disclose if VAT is baked into the price, so the jury’s out to lunch. Or is that dessert?
The Standard has approached Marks & Spencer for comment.
