top of page

Marshmallows challenge Jaffa cakes

Updated: Jul 8 the Tax entertainment stakes

April 2024

A recent Tribunal decision means the humble marshmallow seems to have provisionally kicked off jaffa cakes from the number 1 spot for stupid, but entertaining, HMRCy decisions!

The upper tribunal (UT) has released its decision in relation to the VAT liability of large marshmallows. Who knew this was a major issue? Of course to m'learned fiends at £giga/hr this was a very important matter to fight for as long as the wallets of their clients could stand the draught.


A zillion years ago m'learned friends spent £loads of taxpayers hard-earned money fighting a case which revolved around whether Jaffa cakes were cakes or biscuits, and the 'VAR' decision was that if you left a cake of any sort lying around (who would) it went hard, whereas a biscuit goes soft. Biscuits are VATable at 20% because they're not 'food', whereas food (cakes) is not vatable.

Some may say "how come cakes are food but not biscuits when they've both got zero that's good for you in, and in fact loads of sugar/salt/additives which will kill me?"

A lawyer will not see the problem, especially as he's been paid £loads arguing both sides of the ridiculous for hours on end.

Summary of the conclusion

the VAT treatment of marshmallows now looks like this:

  • tiny little marshmallows – zero rated for VAT purposes, -because they’re usually marketed as ingredients for decorating cakes, and as we all know, cakes are food

  • average-sized marshmallows – standard rated for VAT purposes, -because they’re items of confectionery, and they're usually sold in bags for eating as sweets

  • massive/huge marshmallows – zero rated for VAT purposes, -because they’re usually sold in bags with 'essential' barbeque/party foods, and by implication these require further preparation i.e. taking out of the bag, impaling on a skewer, and heating up over an open fire of some sort.

So size really does matter in the real world

Read the full Tribunal Case here.

Download PDF • 428KB

starting in business? you NEED a company








Recent Posts

See All


bottom of page