Are mega marshmallows eaten with fingers?

The taxpayer sold American sweets and treats including large marshmallows called ‘mega marshmallows’.

HMRC assessed the taxpayer to VAT on the basis that the products were standard rated as an item of confectionery rather than zero rated as a food product. The taxpayer highlighted the fact that the intention was for the product to be roasted over a campfire or barbecue and then eaten. As the intention was not for it to be eaten without roasting it could not be classed as confectionery.

VATA 1994 Sch 8 group 1 covers the zero rating of food items but exceptions include items of confectionery – note (5) confirms that confectionery includes ‘chocolates sweets and biscuits’.

The First-tier Tribunal and Upper Tribunal ruled in favour of the taxpayer; HMRC appealed.

The Court of Appeal found that ‘absent absurdity’ if a product was ‘sweetened prepared food which is...