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image of roasting marshmallows on a fire | accountingweb | Mega Marshmallows VAT win
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HMRC gets a roasting in marshmallow VAT case

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The decision on whether mega marshmallows are zero or standard rated shows that size really does matter when it comes to VAT.

18th Apr 2024
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The wait is now over as we finally learn whether mega marshmallows can be zero rated for VAT purposes or if all these arguments were just a giant fluff.

I recently hosted a dinner party, where out of creativity (or laziness perhaps?) I decided to buy a chafing fuel can that everyone could use to roast their marshmallows to their liking and prepare their own s’mores. Of course, the relevance of this story is not to showcase what one can do for desserts with minimal effort, it is about the fact that I had to buy marshmallows for this – the bigger the better.

Puff piece

The upper tribunal (UT) has released its decision in relation to the VAT liability of large marshmallows. Spoiler alert, the VAT treatment of marshmallows now looks something like this:

  • tiny little marshmallows – zero rated for VAT purposes, because they’re usually marketed as ingredients
  • average-sized marshmallows – standard rated for VAT purposes, because they’re items of confectionery
  • massive/mega/epic/huge marshmallows – zero rated for VAT purposes, because they’re items of food usually requiring further preparation.

Size really does matter.

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Replies (34)

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By Roland195
18th Apr 2024 14:48

How will tiny, average or massive be defined in practice - personal preference?

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Replying to Roland195:
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By FactChecker
18th Apr 2024 20:21

Or degree of obesity of the purchaser - as presumed evidence of previously consumed quantities of, however 'sized', an item that under no definition any nutritionist would be prepared to label as 'food'.

This is farcical (and bad news for the nation's health ... and the NHS ... and your mate)!

Thanks (4)
Replying to Roland195:
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By JustAnotherUser
19th Apr 2024 08:18

I've seen this before with the smaller marshmallows and such, I'm sure the marketing and in store placement comes into play...

mini marshmallows are placed in the bakery aisles and marketed as cake and baking decorations..
had they been placed in the sweet aisle and advertised in the same way as normal sized, they would not be taxed differently
large ones are placed with the BBQ section and also marketed as to be used with smores requiring preparation etc

the whole thing is silly, medieval and a waste of everyone's money and time

Thanks (9)
Replying to JustAnotherUser:
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By FactChecker
19th Apr 2024 16:57

Marshmallows are made of sugar, corn syrup (sugar), water and gelatin.
The magic is how the ingredients are combined - marshmallows are a scaffolding of sugar and gelatin that stays rigid enough to become a network of stable air bubbles.

So absolutely nothing of nutritional value that you couldn't get from a spoonful of sugar ... hardly speaks to me of the criteria under which food was declared zero-rated for VAT purposes.

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Replying to FactChecker:
Daniel J Rice
By Daniel Rice
19th Apr 2024 23:30

That spoonful of sugar you speak of would of course also be zero-rated, thanks to the UK's perfectly sensible VAT legislation...

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Replying to Daniel J Rice:
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By FactChecker
19th Apr 2024 23:45

Indeed (to your first point) ... but presume the sequitur was intentionally sarcastic?

My dentist is appalled at the state of teenage teeth and, alongside dietician/nutritionist specialists, would query in forceful language why anyone thinks sugar is food?

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By Duggimon
19th Apr 2024 09:36

Why don't we just make all food in shops zero rated and all food in restaurants and takeaways VATable?

How much time, effort and money is wasted on testing these stupid cases in courts? VAT legislation is truly absurd, it's the last remnant of the legal system a la Dickens's Jarndyce vs Jarndyce.

Thanks (11)
Replying to Duggimon:
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By JoannaU
19th Apr 2024 10:01

That would be a 'common-sense' view so not likely to happen!

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Replying to Duggimon:
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By paul.benny
19th Apr 2024 10:44

Duggimon wrote:

Why don't we just make all food in shops zero rated and all food in restaurants and takeaways VATable?

That creates its own anomalies - all the supermarkets have food-to-go sections. No to mention Boots which describes itself as a health and beauty retailer but also has a sandwich section.

I disagree that VAT legislation is absurd. There are always going to be political considerations (zero-rating children's clothing) and products that don't fit neatly into categories. This case looks like HMRC trying their hand; other food-related cases reported here look more like the taxpayer trying to push boundaries.

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Replying to paul.benny:
By Duggimon
19th Apr 2024 10:49

paul.benny wrote:

I disagree that VAT legislation is absurd.

the article above wrote:

tiny little marshmallows – zero rated for VAT purposes, because they’re usually marketed as ingredients

average-sized marshmallows – standard rated for VAT purposes, because they’re items of confectionery

massive/mega/epic/huge marshmallows – zero rated for VAT purposes, because they’re items of food usually requiring further preparation.

The food is identical, they are lumps of marshmallow.

Thanks (2)
Replying to Duggimon:
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By paul.benny
19th Apr 2024 14:03

Lots of things are as identical but attract different VAT rates - energy supplied for domestic consumption vs business (which is in fact based on consumption rather than customer); mains water (rate depends on SIC code of customer).

Maybe you will say that proves the absurdity. I would say it shows the difficulty of fixing the boundaries between rates, and these are reasonably clear cut.

Thanks (1)
Replying to paul.benny:
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By listerramjet
19th Apr 2024 10:56

You might just as well disagree that black isn’t blue! All tax legislation is absurd, hoist by its own attempts to rationalise its inconsistencies.

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Replying to paul.benny:
By Duggimon
19th Apr 2024 11:09

paul.benny wrote:
<

That creates its own anomalies - all the supermarkets have food-to-go sections. No to mention Boots which describes itself as a health and beauty retailer but also has a sandwich section.

To give a less facetious answer, it is not difficult to apply common sense to telling the difference between takeaway food for eating and other food shopping. Meal deals are takeaways. Foods to go are takeaways. It's got to be better than three different rules for marshmallows, the various cereal bars, the huge jaffa cake, all these insane rules.

Biscuits are zero rated, cakes are zero rated, chocolate is standard rated, chocolate biscuits are standard rated but chocolate cakes are zero rated. Why? It's stupid, the VAT rules are stupid, I 100% stand by that assertion. It's classic scope creep that's been left unchecked since its inception that's now resulted in unfit rules and a wholesale rethink would cost less time and effort than these constant cases.

Thanks (9)
Replying to paul.benny:
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By roger.meyts
19th Apr 2024 13:45

Food to go gets the same VAT treatment in a supermarket as the same product not sold as "to go" surely!

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Replying to Duggimon:
the sea otter
By memyself-eye
19th Apr 2024 11:19

Tim Martin would have something to say about that idea!

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Replying to Duggimon:
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By abelljms
23rd Apr 2024 13:38

I think standard-rating virtually everything is the way forward, incl books/children's clothes. You can subsidise directly those who need something to help them. Why should every trader have to self-asess their vat liability via such ridiculous rules? what a marshmallow mess the sly lawyers have achieved.

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Replying to Duggimon:
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By abelljms
01st May 2024 09:51

WE require Clever politicians/civil terdants to sort all these messes out, sadly that's not going to happen

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By listerramjet
19th Apr 2024 10:54

I wonder just how stupidly complex and expensive to administer it is possible to make VAT?
The only important question that arises from this nonsense. Do we scrap VAT, HMRC, or both?

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Replying to listerramjet:
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By Rgab1947
19th Apr 2024 17:03

Both please.

Thanks (1)
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By towat
19th Apr 2024 11:08

My family has often enjoyed giant marshmallows and toasted them around a campfire, however I now realise that occasionally one or two were eaten "raw", should I pay the VAT on these items or risk a late night knock on the door from the Customs men (and women)?

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By JamesDS
19th Apr 2024 12:00

Another costly, pointless HMRC crusade where they go after a barely distiguishable subset of a subset of a subset (often with a small army of KCs) and justify the enormous expense by calling it public good, when the behaviour and result is inevitably the opposite.

Quite independent of the tax burden, HMRC's activities are an active drag on the economy and hamper their own efforts to effectively administer the tax system or deliver fairness for any taxpayer.

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Replying to JamesDS:
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By moneymanager
21st Apr 2024 14:09

I think it's deliberate, the functional integrity of ALL aspects if the state have been progressively undermined for at least the last fifty years, this isn't a national impetus but a supranational one.

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By Dogracer
19th Apr 2024 16:23

If you asked the man on the Clapham Omnibus if marshmallows are sweets I think the answer would be yes

Just because it can be toasted doesn’t make it something else

Bread can be toasted but it’s still bread

Poor decision

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Replying to Dogracer:
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By moneymanager
21st Apr 2024 12:58

Many 'breads' contain so much sugar that it should be considered as confectionary.

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Replying to Dogracer:
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By impsomewhat
23rd Apr 2024 12:20

To be fair, back on the omnibus, they may well think that the 'normal' ones are a feast and the mega sized ones are someone having a laugh/winding them up!

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By bernard!
19th Apr 2024 19:53

Probably needs a marshmallow the size of cake sized Jaffa cake to be certain.

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By Caber Feidh
19th Apr 2024 23:49

The marshmallow test in psychology is a famous experimental design that measures a child's ability to delay gratification. If the child is able to sit and look at the marshmallow for a set time without eating it, then the child is rewarded with an extra marshmallow.

Should the psychologists now rerun the experiment to see if the results depend on the marshmallows' VAT status, namely whether it is tiny, average or huge? Should the temptation and the reward both carry the same VAT rate?

Thanks (2)
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By martinatal
21st Apr 2024 14:44

I can purchase dog food kibble in, say 12kg sacks, and the contents will be liable to standard rate VAT. However, if the 12kg sacks state that the similar dog food kibble is for "working dogs", then it is zero-rated. Of course, my dog is a working dog though I don't think that she knows it.

Thanks (2)
Replying to martinatal:
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By roger.meyts
22nd Apr 2024 08:19

Do you have to prove that your working dog earns at least the minimum wage,?

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Replying to roger.meyts:
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By martinatal
22nd Apr 2024 15:41

Only the minimum wag.

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Replying to martinatal:
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By impsomewhat
23rd Apr 2024 12:18

Love this...I need to remind my borders that they need to show their 'tickets' (aka kibble tokens) at the pet shop to get food...thank you, I will be tittering to myself all day with this #livelaughlove

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Replying to impsomewhat:
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By martinatal
25th Apr 2024 15:25

I hope that you have registered your Borders with HMRC for self-employment and applied for their CIS certificates.

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Replying to martinatal:
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By abelljms
01st May 2024 09:48

tell her to chase a cat/fox once a week, and make sure you keep photo-evidence in case of an HMRCy officer checking up on you.?

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By abelljms
01st May 2024 09:47

it just re-raises the old chestnut (0-rated item!) of defining food. Make everything vatable, and there is nothing to argue about.

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