When is a marshmallow a sweet and when is it a ‘cooking ingredient’?
Well, the answer appears to be when they are Mega Marshmallows!
Innovative Bites Ltd who distribute ‘Mega Marshmallows’ recently won its VAT dispute with HMRC over whether its product qualified for VAT zero-rating.
HMRC had argued that the mega marshmallows should be classified as confectionery, as the marketing focus was on roasting them over an open fire. That would have made them standard-rated. Innovative Bites argued the marshmallows were primarily sold as a cooking ingredient and used for melting and toasting. So were not bought for direct consumption like most sweets.
The Upper Tribunal ruled that ‘Mega Marshmallows’ were not confectionary within the meaning of the VAT legislation. And, when we are talking about VAT legislation, we are talking Group 1, Schedule 8 of the Value Added Tax Act 1994, of course.
