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Court Rules: Innovative Bites' Marshmallows Not Subject to VAT as They're Not Sweets

A food company, Innovative Bites Ltd, successfully appealed against a UK tax authority (HMRC) demand for £472,928 in sales tax on their marshmallows, called "Mega Marshmallows." The judges ruled that these marshmallows were not considered confectionery and therefore not subject to VAT (Value Added Tax), as they were sold and purchased specifically for roasting.
HMRC's appeal was rejected.

The text discusses a tax dispute over the Value-Added Tax (VAT) rate for Mega Marshmallows.

HMRC argued that they are subject to the standard 20% VAT rate, as they are "sweetened prepared food which is normally eaten with the fingers." However, the company Innovative Bites, which produces Mega Marshmallows, argued for a lower VAT rate, comparing them to cooking chocolate and tiny marshmallows, which are not taxed because they are considered cooking ingredients.

The judges sided with the lower tribunal's decision, stating that since Mega Marshmallows are not typically roasted before consumption, they will be eaten with the fingers and may be cut up for young children.

Therefore, they fall under the category of "sweetened prepared food which is normally eaten with the fingers" and are subject to the standard 20% VAT rate.

The text discusses a court judgment regarding a roasted food product.

The judges ruled that the method of eating the product, whether it's off the stick or with fingers, is not a significant factor in the product's definition.

Therefore, the focus should be on the product itself rather than how it is consumed.

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