Sandwich or Confectionery? M&S strawberry sandwich raises VAT questions
M&S has jumped on the bandwagon of the viral Japanese strawberry sando by launching its take, taking the internet by storm, but the sweet treat has raised the old familiar question about VAT.
The British retailer’s strawberry and cream (half) sandwich, wrapped up in its meal-deal packaging, is all over social media as shoppers race to taste the sweet sandwiches. Most are intrigued to know if the bread is the standard meal-deal bread or if it is sweet, as the Japanese typically use milk bread in their original version.
However, as the hype builds up, accountants and lawyers have been lighting up LinkedIn, questioning whether this dessert sandwich may be classified as confectionery.
If a food product is deemed a confectionery, it will be liable for 20 per cent VAT, compared to zero-rated, which most sandwiches typically fall under.
The mystery surrounding VAT has long persisted, following the famous ‘Is it a biscuit or a cake’ debate from the Jaffa Cake legal battle with HMRC. City AM has a long read on VAT legal battles the UK’s favourite snacks had with the tax authority.
However, a recent VAT case concerning giant marshmallows has caused considerable confusion.
The tax authority decided that the ‘mega’ marshmallows should have been taxed at the standard rate rather than the current zero-rated rate, resulting in London-based Innovative Bites seeking an appeal of that decision.
The case has been in and out of court, taking bizarre turns each time. The latest development occurred in Marsh, where a court granted an appeal following questions about how people consumed large marshmallows.
Now, as Adam Craggs, partner at RPC, noted, “the M&S jam sandwich may soon join this curious canon of VAT case law.”
Jaffa Cake 2.0
“We are accustomed to sweet peanut butter and jam, or chocolate spread, sandwiches,” explained Max Schofield, barrister at Devereux Chambers, as he pointed out the uncertainty from the ‘mega marshmallows’ case could see sweet sandwiches fall within ‘confectionery’ category.
Simon Knivett, VAT manager at HW Fisher, part of the Sumer Group, explained: “The bread in this new M&S sandwich is sweetened, and the idea of eating a sandwich with your fingers is not absurd, which points towards 20 per cent VAT being applicable if we strictly apply the wording of the legislation.”
“This is because of a change in the late 1980s which tried to capture cereal bars with the words’ sweetened prepared food… eaten with the fingers’,” Schofield noted.
Knivett pointed out that the Court of Appeal stated in the ‘mega marshmallow’ case that ‘anything falling within Note 5 is “confectionery”… absent absurdity or the like’.
“Therefore, is it absurd to consider a product which resembles and is sold as a sandwich as confectionery,” he added.
From a business perspective, Craggs highlighted that “cases like this underscore the challenges of interpreting and applying VAT rules in the context of food. The body of legislation is dense, inconsistent in places, and filled with exceptions that often feel arbitrary.”
If the hype around the strawberry sandwiches continues, we may see the sweet treat in front of HMRC’s desk. However, as one keen LinkedIn commentator noted: “Anyone buying this monstrosity should be charged 100 per cent VAT.”
