Poppadoms are crisps now
It’s crunch time for Walkers after a ruling that the company must pay VAT on its mini poppadoms because they are really more like crisps.
Under the complex tax rules, foods on that list attract 20% VAT, which can mean a multimillion-pound bill for sellers. Traditional poppadoms are zero-rated as they are deemed to be a restaurant food or one that requires further preparation rather than a packaged snack.
Previous VAT debates have involved McVitie’s Jaffa Cakes, which tax authorities in the 1990s unsuccessfully argued were biscuits; Pringles, a win for HM Revenue and Customs when they were found to be a crisp; and flapjacks, which were found to be too chewy to be a cake and therefore subject to VAT.
In 2008, Marks & Spencer claimed back £3.5m in overpaid VAT on its chocolate teacakes after a 12-year battle that ended in Europe’s highest court ruling they were cakes and not a biscuit.
Walkers argued its mini poppadoms should not be classed as a crisp as they were not made from potato and required preparation before consumption, as they were designed for dipping in sauces or to have alongside a curry.
However, a tax tribunal found that the “small, generally round, bite-sized objects”, which were “somewhat wavy, with small bubbles on the surface”, were crisps in all but name as 40% of the ingredients were “potato-derived” including potato granules and potato starch.
It’s crunch time for Walkers after a ruling that the company must pay VAT on its mini poppadoms because they are really more like crisps.
Under the complex tax rules, foods on that list attract 20% VAT, which can mean a multimillion-pound bill for sellers. Traditional poppadoms are zero-rated as they are deemed to be a restaurant food or one that requires further preparation rather than a packaged snack.
Previous VAT debates have involved McVitie’s Jaffa Cakes, which tax authorities in the 1990s unsuccessfully argued were biscuits; Pringles, a win for HM Revenue and Customs when they were found to be a crisp; and flapjacks, which were found to be too chewy to be a cake and therefore subject to VAT.
In 2008, Marks & Spencer claimed back £3.5m in overpaid VAT on its chocolate teacakes after a 12-year battle that ended in Europe’s highest court ruling they were cakes and not a biscuit.
Walkers argued its mini poppadoms should not be classed as a crisp as they were not made from potato and required preparation before consumption, as they were designed for dipping in sauces or to have alongside a curry.
However, a tax tribunal found that the “small, generally round, bite-sized objects”, which were “somewhat wavy, with small bubbles on the surface”, were crisps in all but name as 40% of the ingredients were “potato-derived” including potato granules and potato starch.