Innovative Bites Ltd v Revenue and Customs (VAT, Zero-Rating, Food, Confectionery, Note 5 Item 2 of Group 1 Schedule 8 Value Added Tax Act 1994 - Whether oversized marshmallows normally eaten with the fingers) [2026] UKFTT 500 (TC) (31 March 2026)

Innovative Bites Ltd v Revenue and Customs (VAT, Zero-Rating, Food, Confectionery, Note 5 Item 2 of Group 1 Schedule 8 Value Added Tax Act 1994 - Whether oversized marshmallows normally eaten with the fingers) [2026] UKFTT 500 (TC) (31 March 2026)

The tribunal found, on the balance of probabilities and a multi-factorial assessment of the evidence, that 'Mega Marshmallows' are more frequently eaten by means other than with the fingers (i.e., from a skewer or as part of a s'more) and thus are not 'normally eaten with the fingers' within the meaning of Note 5. Consequently, the product does not fall within the exception to zero-rating for confectionery under Item 2, and the appeal is allowed.

Citation
[2026] UKFTT 500 (TC)
Parties
Appellant: Innovative Bites Limited; Respondents: The Commissioners for His Majesty's Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
31 March 2026
Procedural Posture
VAT Appeal / Remitted Hearing Before First Tier Tribunal Following Court of Appeal Decision
Outcome
Appeal allowed
Legal Topics
Value Added Tax, Zero Rating, Confectionery Classification, Interpretation of Note 5 Item 2 Group 1 Schedule 8 VATA 1994
Tax Law Value Added Tax Zero Rating Confectionery Classification Interpretation of Note 5 Item 2 Group 1 Schedule 8 VATA 1994

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Parties

Innovative Bites Limited

Appellant

The Commissioners for His Majesty's Revenue and Customs

Respondents

Procedural Posture

VAT Appeal / Remitted Hearing Before First Tier Tribunal Following Court of Appeal Decision

Legal Issues

  1. 1 Whether 'Mega Marshmallows' are 'sweetened prepared food which is normally eaten with the fingers' within Note 5 Item 2 Group 1 Schedule 8 VATA 1994

Ratio Decidendi

The tribunal found, on the balance of probabilities and a multi-factorial assessment of the evidence, that 'Mega Marshmallows' are more frequently eaten by means other than with the fingers (i.e., from a skewer or as part of a s'more) and thus are not 'normally eaten with the fingers' within the meaning of Note 5. Consequently, the product does not fall within the exception to zero-rating for confectionery under Item 2, and the appeal is allowed.

Court Disposition

Appeal allowed

Orders

  • Assessment for £472,928 VAT on 'Mega Marshmallows' set aside; product is zero-rated for VAT purposes.