Biscuits were partly covered in chocolate

The ‘Blissfuls’ biscuit was first sold by the taxpayer in December 2021 and consists of three layers: a biscuit base; a chocolate cream filling in the middle; and a biscuit lid as the top layer. HMRC and the taxpayer agreed that the product was fit for human consumption it was definitely a biscuit and it had a chocolate cream filling. However the legislation does not allow the zero rating of a biscuit that is ‘wholly or partly covered’ in chocolate or something similar in taste and appearance (VATA 1994 Sch 8 Group 1 excepted item 2.

HMRC claimed that the biscuit logo did not cover the whole of the product only 80% so what remained was covered in chocolate as a result of which the ‘partly covered’ exception applied. The department’s representative accused the taxpayer of seeking ‘to put a gloss on the words...