Two confectioners responsible for producing popular British treats have won a landmark ruling worth £2.8 million – because their products have been judged as cakes.
Snowballs, a popular snack manufactured by both Lees of Scotland and Tunnock’s, were originally judged to be standard-rated confectionary. Both companies lost their claims for tax rebates in 2012, with Lees of Scotland appealing for £2million and Tunnock’s appealing for £800,000. Both the confectioners and HMRC were unrelenting in their opinion of how the snack should be treated, leading to the unique trial.
Phillip Simpson (representing Lees and Tunnock’s) insisted that the product should be VAT free like the Jaffa Cake, whereas Luke Connell (representing HMRC) stated that the product was correct to be defined as standard-rated confectionary. According to judges Anne Scott and Peter Sheppard, a plate of treats including snow cakes and Bakewell tarts were presented to assist in the deliberations.
“A Snowball looks like a cake. It is not out of place on a plate full of cakes. A Snowball has the mouth feel of a cake”, said Judge Scott. The product was later described as “a sweetened prepared confection” which was “to be savoured but not eaten whilst walking around or, for example, in the street”. The product’s characteristics led to the appeals by both Lee’s and Tunnock’s being accepted at the climax of the tribunal, allowing them both to receive the rebates they had been denied two years earlier.