Believe it or not, this seemingly silly question is now central to a £500,000 VAT dispute that’s gone all the way to the Court of Appeal.
London-based sweet importer, Innovative Bites, found itself in a sticky situation with HMRC over its ‘Mega Marshmallow’.
HMRC says they are a confectionery item, which means 20% VAT, however, Innovative Bites says they were primarily used for roasting over fires using a skewer, so therefore they should be considered a zero-rated food item.
Back in 2022, the First-Tier Tribunal agreed with Innovative Bites, pointing out that these jumbo marshmallows are sold in BBQ aisles, in supermarkets, and not exactly snackable without a bit of fire involved.
But HMRC appealed, and in 2024, the Upper Tribunal backed the original decision that these marshmallows are for toasting, not for eating straight out the packet.
Fast forward to March 2025, and it’s reached the Court of Appeal. Now, the key question is, how are people eating these? The court has handed it back to the First-tier Tribunal to dig into how these giant marshmallows are typically consumed, to help make the final decision.
It may sound like a weird and wonderful battle over marshmallows, but the lesson behind it is important. Tax legislation can sometimes be considered a grey area and open to interpretation, whether it’s VAT on snacks, employment contracts, or data compliance, running a business means navigating a lot of legal, so if there is anything you are ever unsure about, feel free to get in contact with us on 01872 267 267 or email us contact@whyfield.co.uk.
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