December 18, 2023
Article
In the accountancy profession, VAT and chocolate biscuits is a great source of amusement. Yes, I know we’re a sad bunch. However, it might amuse you to know that the current rules state that if a biscuit is wholly or partly covered in chocolate, VAT is due (but note, Jaffa cakes are not biscuits – but that’s a whole other story!). HMRC do, however, generously accept that if the chocolate on a gingerbread man is limited to a couple of dots for eyes the covering is “de minimis” and zero-rating applies.
This means that chocolate digestives are standard rated, but bourbon biscuits are zero-rated because the chocolate is sandwiched between two biscuit halves and isn’t on the outside.
Now, McVitie’s have launched “Blissfuls” which has a biscuit base, then a layer of chocolate hazelnut, a layer of chocolate and is topped with a McVitie’s logo made of biscuit.
The biscuit logo is slightly smaller than the base, so does not cover the whole of the biscuit, and you see about 20% of the chocolate layer. So, is a Blissful standard rated, or zero-rated? HMRC say that because the logo doesn’t cover every bit of chocolate, the biscuit IS “partly covered” in chocolate and thus, standard rated. McVitie’s say that because the chocolate isn’t on the very top of the biscuit, the chocolate can’t be a covering, so zero-rating applies. A Tax Tribunal has just sided with HMRC, but I wouldn’t be surprised if McVitie’s Appeal.
And so, the great biscuit debate continues! Whilst this may not be relevant to your business, it demonstrates the complexity of VAT. If you have any queries on any VAT matters, please do get in touch.