Content
Leading article...
We can't go on like this...
General tax...
The name is Bond
Blessed are the givers
Excuses, excuses
PAYE the penalty
Silver and gold
Moving goalposts
Doctor, doctor...
Something phishy
Pension problems
Tax dot com
Unpleasant discoveries
Fair's fair (at last)
Chartered taxpayers
This year, next year
VAT...
Focus your mind
Flat rates aren't flat
Reverse the charges
Flapjack flash
Ready set ECSL
A lofty idea
Law items...
I want my lawyer
Not on my holiday
A grey area
No difference
| Jaffa Cakes were the subject of a famous VAT dispute: chocolate cake or chocolate biscuit? The court decided that they were cakes, because - seriously - cakes go hard when they are stale and biscuits go soft. After an adjournment to allow the evidence to go stale, it was found to have become hard. Why does it matter? Cakes are zero-rated for VAT, but chocolate biscuits and "confectionery" are standard rated. Another argument recently came before the Tribunal. Asda ran a competition for people to design new products, and a retired wrestler came up with a bar containing a variety of seeds. The judges thought it was tasty and the company marketed it as a "flapjack bar", even though flapjacks traditionally are made of oats and contain other ingredients that weren't included in this product. HMRC may have suspected that it was called a flapjack because they decided back in the 1970s that flapjacks are cakes, not confectionery, so they aren't charged to VAT. Cereal bars are usually taxed as sweets. The Tax Tribunal had to discuss the weighty question "what is a flapjack?" and decided that these seed bars didn't fit the description. VAT was due. Although this must be light relief for the judges - and a tasty snack between other cases - it highlights the difficulty of applying the VAT rules if you are a retailer. How can you tell what's VATable and what's not? Usually you follow what the supplier does - if they charge VAT, so do you. But if you want to discuss the correct liability of your stocks, we'll be happy to talk - over a cup of tea and a biscuit. |
© Bayar Hughes & Co., 2010.