Commissioners of Customs and Excise v Quaker Oats Ltd

JurisdictionEngland & Wales
CourtQueen's Bench Division
Judgment Date13 October 1987
Date13 October 1987

Queen's Bench Division (Crown Office List).

Customs and Excise Commissioners
and
Quaker Oats Ltd

Mr. John Laws (instructed by the Solicitor for Customs and Excise) for the Crown.

Mr. David Milne Q.C. (instructed by Messrs. Ashurst Morris & Crisp) for the taxpayer company.

Before: Kennedy J.

The following cases were referred to in the judgment:

Candy Maid Confections Ltd. & Ors. v. C. & E. Commrs.UNK[1968] 3 All E.R. 773

C. & E. Commrs. v. Beecham Foods Ltd. UNK[1972] 1 All E.R. 498

C. & E. Commrs. v. Clark's Cereal Products Ltd.UNK[1968] 3 All E.R. 778

C. & E. Commrs. v. Popcorn House Ltd. UNK[1968] 3 All E.R. 782

UB (Biscuits) Ltd. (LON/85/560 and LON/86/18) No. 2040

Value added tax - Zero-rating - Food - Cereal bars - Whether confectionery similar to chocolates or sweets - Whether zero-rated - Value Added Tax Act 1983 schedule 5 group 1Value Added Tax Act 1983. Sch. 5, Grp. 1, item 1, exception 2.

This was an appeal by the Crown against the decision of a VAT Tribunal ((LON/86/567) No. 2293) that "Harvest Chewy Bars", sold by the taxpayer in fruit and nut and chocolate chip varieties, were zero-rated under theValue Added Tax Act 1983 schedule 5 group 1Value Added Tax Act 1983, Sch. 5, Grp. 1.

"Harvest Chewy Bars" were cereal bars which were sold individually wrapped in packets of five. They contained the same basic ingredients as the taxpayer's "Harvest Crunch" breakfast cereal which was zero-rated. The Commissioners of Customs and Excise took the view that the bars were confectionery similar to chocolates or sweets and were therefore within the Value Added Tax Act 1983 schedule 5 group 1Value Added Tax Act 1983, Sch. 5, Grp. 1, item 1, exception 2.A VAT Tribunal decided that the bars were not within the exception because they were more akin to biscuits than to chocolates or sweets.

The Crown appealed contending that in reaching its conclusion the Tribunal had not applied the correct test. It had not concerned itself with general similarities such as packaging and taste, but had looked for features which would make the bars identical to chocolates or sweets. Moreover, it did not pay sufficient regard to the decision of another VAT Tribunal which held that a similar product was taxable at the standard rate and, if the Tribunal had good reasons to differ from that decision, those reasons should have been given.

The taxpayer contended that the Tribunal was entitled to conclude that the bars were not similar to chocolates or sweets, and that the difference between the Harvest Chewy Bars and the bars considered by the other Tribunal were such that it was not necessary to give detailed reasons. The other bars contained more fruit and fat, and the process of manufacture was different.

Held, dismissing the Crown's appeal:

1. Looking at the facts before the Tribunal, it was possible that the bars considered by the other Tribunal were significantly different from Harvest Chewy Bars.

2. The Tribunal had come to a decision having regard to the relevant law and the facts of the case and it was entitled to conclude that Harvest Chewy Bars were not similar to chocolates or sweets within the exception. The bars were therefore zero-rated.

NOTICE OF MOTION

The Crown appealed against the decision of a London VAT Tribunal on the following grounds:

  1. (2) The Tribunal erred in law by taking too narrow an approach to the construction of the expression "similar confectionery". Such expression was capable of describing confectionery such as popcorn, which although not the same as chocolate or sweets, was nevertheless similar thereto, hence in making too rigid a comparison with chocolates or sweets, the Tribunal failed to properly construe such expression.

  2. (3) The Tribunal misdirected itself when applying the tests for determining whether the bars in question were "similar confectionery" in that a "substantial amount of sweetening matter" need not be the equivalent of the sugar content of either chocolates or sweets.

  3. (4) In deciding that such bars were not confectionery similar to chocolates and sweets, the Tribunal arrived at a conclusion which no reasonable Tribunal would have made.

JUDGMENT

Kennedy J.: This is an appeal on a point of law from a decision of a VAT Tribunal under the chairmanship of Mr. Neil Elles which, on 17 February 1987, allowed an appeal from a decision of the Commissioners dated 7 October 1986. On that day the Commissioners had notified the taxpayer company that two products known as "Harvest Chewy Bar" (fruit and nut flavour) and "Harvest Chewy Bar" (chocolate chip flavour) were taxable at the standard rate.

The taxpayer company make both bars. Their experience in this particular field began with the manufacture of a breakfast cereal marketed as "Harvest Crunch". That was and is zero-rated for the purposes of VAT. They then produced Harvest Crunch in bar form, a "Harvest Crunch Bar". That too was and is zero-rated for the purposes of VAT. They then moved on to the two bars with which this case is concerned. The reason for the move was no doubt to fill what they conceived to be a gap in the market.

It is a finding of the Tribunal in this case that the ingredients in the two bars with which I am concerned are basically the same as the Harvest Crunch breakfast cereal. I need not recite those ingredients here. Both products, it says, consist of an individually wrapped item of confectionery which is made by baking cereal and nuts with a syrup and mixing those baked ingredients with more unbaked items consisting of nuts, fruit, crisped rice and more syrup and with chocolate chips in the case of the chocolate chip variety only. It is understood that although the bars are individually wrapped they may only be served in packages of five bars.

I turn from there to the statutory provisions with which this case is concerned. Value Added Tax Act 1983 schedule 5Schedule 5 to the Value Added Tax Act 1983 provides:

  1. 1. Food of a kind used for human consumption shall be chargeable to tax at zero rate.

But there are certain exceptions and in particular by virtue of exception number 2,

Chocolates, sweets and similar confectionery (including drained, glacé, or crystallized fruits); and biscuits and other confectionery (not including cakes) wholly or partly covered with chocolate or some product similar in taste and appearance

fall to be taxed at the standard rate.

The question which therefore originally confronted the Commissioners, then the VAT Tribunal and now me, was whether or not these two bars can properly be described as "chocolates, sweets and similar confectionery". It is substantially agreed that they are not chocolates and they are not sweets. So the question really is, are they properly described in that particular context as being "similar confectionery"?

Mr. Laws, on behalf of the Crown, submits that no Tribunal, on the facts of this case, which directed itself properly in law could have found that they were not. I turn to look again at the facts. First of all it is to be noted that these bars do appear to have a much lower sugar content than the average sweets. Charts were produced before the Tribunal from which that conclusion can be drawn. The sugar content of the Harvest bars is more akin to the sugar content of biscuits.

Secondly, it is to be observed that the method of sale is different to that normally adopted in the case of chocolates and sweets. The Tribunal dealt with this...

To continue reading

Request your trial
10 cases
  • Procter & Gamble UK v HM Revenue and Customs
    • United Kingdom
    • Chancery Division
    • 4 July 2008
    ...to adopt, the Tribunal referred in paragraph 8 to the decisions in C&EC v Ferrero UK Ltd [1977] STC 881 and C&EC v Quaker Oats Ltd [1987] STC 683. Since the parties do not agree about what, if any, assistance can be derived from those decisions in the present case, I should say something a......
  • HM Revenue and Customs v Premier Foods (Holdings) Ltd
    • United Kingdom
    • Chancery Division
    • 24 October 2007
    ...& E Commrs v Ferrero UK LtdVAT [1997] BVC 408 C & E Commrs v Popcorn House LtdUNK [1968] 3 All ER 782 C & E Commrs v Quaker Oats LtdVAT (1987) 3 BVC 119 Value added tax - Zero-rating - Food - Fruit bars - Whether product confectionery - Whether bars zero-rated for VAT purposes - Value Added......
  • WM Morrison Supermarkets Plc
    • United Kingdom
    • First Tier Tribunal (Tax Chamber)
    • 13 April 2021
    ...which they found of any particular help, and concluded in para 29: Turning to the criteria mentioned in C & E Commrs v Quaker Oats Ltd (1987) 3 BVC 119, we do not consider that the ingredients are those normally associated with confectionery; in particular, there was no added sweetening mat......
  • Kalron Foods Ltd v HM Revenue and Customs
    • United Kingdom
    • Chancery Division
    • 30 March 2007
    ...in any case to decide which side of the line a particular product falls. 44 In that context, he refers to C&EC v Quaker Oats Ltd [1987] STC 683 and C&EC v Ferrero UK Ltd [1997] STC 881 (CA). 45 In Quaker Oats,, four relevant criteria were identified which needed to be examined in the contex......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT