Mega marshmallows are not confectionery

The taxpayer sold American sweets and treats including large marshmallows called ‘mega marshmallows’. It said the product was designed to be roasted and therefore qualified as a zero-rated cooking product.

HMRC assessed the taxpayer to VAT on the basis that the mega marshmallows were standard rated as an item of confectionery rather than zero rated as a food product. VATA 1994 Sch 8 group 1 covers the zero rating of food but there are exceptions including confectionery. Note 5 of the group confirms that confectionery includes ‘chocolates sweets and biscuits’.

The First-tier Tribunal allowed the taxpayer’s appeal on the basis that the mega marshmallows were sold and bought as a product specifically for roasting. HMRC appealed saying the First-tier Tribunal had erred in law..

The Upper Tribunal disagreed with HMRC. The judges said there was no case law to support HMRC’s argument that simply heating a confectionery...