After losing twice in the protracted 'huge marshmallow' tax case, HMRC has announced its intention to lodge another appeal.
Last month, the High Tax Court upheld a lower court ruling that “jumbo marshmallows” sold by London-based wholesaler Innovative Bites are not considered sweets and are therefore exempt from VAT.
The case revolves around the classification of “jumbo marshmallows” for VAT purposes. The Supreme Tax Court agreed with the lower court's findings that the product was marketed and sold specifically for roasting, and that its large size distinguished it from smaller, standard-rated marshmallows.
Despite these provisions, HMRC maintain that “jumbo marshmallows” should be classified as confectionery and subject to standard VAT. On Thursday, HMRC updated its VAT appeals, stating that it was seeking permission to appeal the decision, and continuing its argument against the current classification.
Glenn Edwards, VAT director at accountancy firm MHA, expressed astonishment at HMRC’s insistence: “We all thought this was the end of the debate over the giant marshmallow tax, but HMRC have decided to appeal again in the hope of convincing the tax authorities.” Finally, the size is not large. “not everything.”
Edwards also raised concerns about the public perception of this protracted legal battle: “The general public may wonder whether this is really the best use of taxpayers' money when we all know that understanding the dividing lines of food VAT has defeated the best legal approaches.” minds for decades.”
This sentiment was echoed by Jilly McCullagh, VAT consultancy director working with Innovative Bites, describing HMRC’s decision as “disappointing”. She questioned the practicality and financial feasibility of continuing the appeal: “Is this really in the best interests of taxpayers' money? Where and when will this stop?”
A HMRC spokesperson confirmed the department's intentions: “We are seeking permission to appeal the (High Court) decision to the Court of Appeal.”
As HMRC seeks another round in the 'mega marshmallow tax' case, debate continues over the labeling of the product and the use of public funds in protracted legal disputes. With the Court of Appeal being the next potential battleground, the final resolution of this VAT issue remains uncertain.