HMRC seeks another bite in ‘mega marshmallow’ tax case

After losing twice in the long-running ‘mega marshmallows’ tax case, HMRC has said it is looking to file yet another appeal.

Last month the Upper Tax Tribunal agreed with a lower tribunal ruling that said ‘mega marshmallows’ sold by London-based wholesaler of American sweets and treats, Innovative Bites, are not a confectionery and therefore can continue not paying VAT.

It also agreed with the lower tribunal’s findings that said the way the product was marketed and sold was specifically for roasting, and the very size of the giant marshmallows made it clear the product was different to standard rated smaller marshmallows.

However, according to an update on Thursday by HMRC on its VAT appeals, it has stated that it is seeking permission to appeal the decision, continuing its argument that ‘mega marshmallows’ are confectionery and ought to have been standard rated.

Commenting on this decision, Glyn Edwards, VAT director at accountancy firm MHA said: “We all thought this was the end of the giant marshmallows tax debate, but HMRC have decided to appeal again in the hope of finally persuading the tax authorities that size isn’t everything.

“More seriously the general public might question whether this is really the best use of taxpayer’s money when we all know that making any sense of the VAT dividing lines on food has defeated the best legal minds for decades,” he added.

HMRC and The VAT consultancy, which is working with Innovative Bites on the case, have been approached for comment.