Marks & Spencer Plc
| Jurisdiction | UK Non-devolved |
| Judgment Date | 23 November 1989 |
| Date | 23 November 1989 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
Goodfellow & Steven Ltd VAT(1987) 3 BVC 1332; (EDN/87/10) No. 2453
Quaker Oats Ltd; C & E Commrs v VAT(1987) 3 BVC 119
Round (E) & Son Ltd VATUNK(1986) 2 BVC 208,094; (MAN/85/165) No. 2069
Assessment - Whether Caramel Shortcake Slices were standard-rated as biscuits, or zero-rated as cakes - Value Added Tax Act 1983 schedule 5 group 1Value Added Tax Act 1983, sec. 16, Sch. 5, Grp. 1 - Value Added Tax (Confectionery) Order 1988 No. 505.
The issue was whether the Caramel Shortcake Slices retailed by Marks and Spencer were standard or zero-rated.
The appellant contended that the Caramel Shortcake Slices (the product) was a cake and therefore zero-rated. Evidence was given for the appellant that the product was beaten in a conventional cake mixer and sold in slice form to fit in with the "cake slice range". The maximum shelf-life of a cake was 25 days, whereas biscuits would last significantly longer. In the trade the term "flour confectionery" or "baker's confectionery" included all kinds of cake, including shortcake, but not biscuits.
The product, presented in slices for convenience, could as easily be sold as a larger slab. It had a much shorter shelf-life than either "biscuits" or "confectionery". It was marketed as part of the appellant's range of cakes. All the cakes were displayed on a cake counter, whereas the biscuits were displayed by the savouries rather than next to the cakes. The average price per biscuit was between 2-4 pence whereas the product cost 17.8 pence per slice. The cake department sold cakes and bread only and not biscuits which had a longer shelf-life. The manufacturer of the product made only cakes and no biscuits. Biscuits had a harder texture.
The appellant contended that the main factors to be taken into consideration were the manufacturing process, the appearance and the marketing, and the objective test of what the man in the street would say should be adopted. The product had the ingredients of a cake, was baked in tins and was marketed as part of a range of sliced cakes.
The commissioners contended that the product was "other confectionery" and not a cake. The product should be looked at as a whole. The base of the product was too firm to be a cake and the moisture content too low.
Held, allowing the company's appeal:
1. In appearance the product looked like a cake and there was nothing inconsistent with a cake in either its...
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