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Bitter-sweet rules on chocolate very taxing for Cumbrian shoppers

When does the price of a bow tie take the biscuit? When it’s in chocolate on a gingerbread man.

Mike Evans photo
Mike Evans

A Cumbrian tax specialist has lifted the biscuit tin lid on a new kind of pasty tax, close to every chocoholic’s heart.

Helen Thornley, a tax consultant for Armstrong Watson in Penrith, has revealed that a couple of buttons or a bow tie on a gingerbread man’s coat will add 20 per cent VAT to his price, which is less than sweet.

Under the bizarre rules, he is ‘zero-rated’ for VAT if only his eyes are chocolate.

Custard creams and bourbons are zero-rated, while chocolate-covered biscuits are a luxury foodstuff and subject to the tax.

A millionaires’ shortbread is exempt but chocolate-covered shortbread is not.

Speaking to the News & Star, Helen said: “The general rule is that food is zero-rated [free from VAT].

“The general exception for biscuits does not apply to the luxury end – so chocolate-coated biscuits are subject to VAT.”

Michael Evans, who runs a popular bakery stall in Carlisle’s indoor market, decided not to make chocolate-covered biscuits because of the rules

He said: “Chocolate chip cookies aren’t VAT-able but chocolate-covered biscuits are. Suddenly my profits were cut down and I couldn’t absorb it. I think it’s crazy.”

Helen, however, has defended the tax law, despite her love of biscuits.

“From a personal perspective it’s quite mad to go to all this trouble to determine the VAT position and analyse to such detail.

“However, from a professional perspective, I can see that if you are going to invest huge sums in a factory and advertising to sell millions of your products, whether or not you have to factor in the VAT is not a trivial issue.”

Perhaps one of the most famous confectionery cases in history centred on Jaffa Cakes. VAT is payable on chocolate-covered biscuits, but not on chocolate-covered cakes.

To prove their case McVities baked a giant Jaffa Cake to persuade the court of its cake-like properties.

Have your say

Michael Owen: I have to echo John's comment - what has UK VAT law got to do with the EU? Does your contribution represent the official Carlisle UKIP position on chocolate cakes and is it in line with The Great Farage's own thinking on VAT, chocolate and the great EU anti-British chocolate biscuit conspiracy?

Posted by BM on 15 August 2012 at 21:44

so if we want to be tax free on our chocolate biscuits,we wont buy them.but if the entire generations of people in the uk do that,we can say by-by to our biscuit industries,and bakers.

Posted by robert on 15 August 2012 at 17:01

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