HMRC v Innovative Bites Ltd

In HMRC v Innovative Bites Ltd [2024] UKUT 95 (TCC) (4 April 2024) the UT upheld the FTT decision that Mega Marshmallows can be zero-rated because they do not fall within VATA 1994 Sch 8 Group 1 excepted item 2.

VATA 1994 Sch 8 Group 1 provides for the zero rate of VAT to apply to food but refers to Excepted items which are subject to VAT at the standard rate. Excepted Item 2 is: ‘Confectionery not including cakes or biscuits other than biscuits wholly or partly covered with chocolate or some product similar in taste and appearance.’ The primary issue for the UT was whether the product fell within excepted item 2 which involved considering the relationship between excepted item 2 and note 5 to the legislation.

Note 5 says that the word ‘confectionery’ in excepted item 2 ‘includes chocolates sweets and biscuits; drained ...