VAT News (Sour Cream 'N Onion Flavour)

You may remember the court battles nearly 20 years ago between HM Customs and McVities over whether the Jaffa Cake was a cake or a biscuit. To cut a long story short, the Customs men said they thought the cake was a nothing more than a chocolate-cotaed biscuit, and subject to VAT at the full rate, whereas McVities classed it as a cake and thus zero-rated.

The clincher for McVities was that biscuits would normally be expected to go soft when stale, whereas cakes would normally be expected to go hard. Apparently Jaffa cakes become hard when stale. HM Customs missed a trick there, because it could be shown that in practice packets of Jaffa cakes are consumed quickly once opened, so the condition when stale is largely immaterial. Other factors taken into account by the court included the name, ingredients, texture, size, packaging, marketing, presentation, appeal to children, and manufacturing process.

Followers of VAT tribunal cases on snack foods will be interested in the latest Court of Appeal ruling in this area. Proctor & Gamble were at the High Court last year, where they argued that their best-selling product was not similar to potato crisps, because of their "mouth melt" taste, "uniform colour" and "regular shape" which "is not found in nature". This might be a surprising admission from a food manufacturer, particularly in these health conscious days, but perhaps it will have limited impact on the rest of P&G’sr product range, because Pringles are their one and only “non-pet” food product, the rest being a broad range of detergents, shaving goods, deodorants, dog food and feminine protection (whatever that means).

It seems the judge was not impressed. “There is more than enough potato content for it to be a reasonable view that it is made from potato," said Lord Justice Jacob (apparently no relation to the Cream Cracker of the same name). He gave short shrift to the argument that potato crisps were not normally packaged in tubes, and quite rightly too. Nor was he swayed by the argument (somewhat along the lines of the McVitie case) that potato crisps are made from real slices of potato and do not contain non-potato flours, whereas Pringles are more like a cake or a (non-chocolate coated) biscuit, it claimed, because they are manufactured from dough.

From memory, both Pringles and their natural rivals from Leicester (made from 100% English potatoes) lose their flavour and pass from crunchiness to brittleness to sogginess when stale. Indeed the Ig Nobel committee presented a nutrition prize in 2008 to Massimiliano Zampini of the University of Trento, Italy and Charles Spence of Britain's Oxford University, who tricked people into thinking they were eating fresh crisps by playing them loud, crunching sounds when they bit one, no distinction was made between Pringles and potato chips. Based on the facts and case law Proctor & Gamble never had a chance.