Just when you thought VAT couldn’t be any more ridiculous, then comes along the Pringles case!
Now the VAT liability of foodstuffs is ridiculously complicated with some things being standard rated and some zero-rated. The legislation on food is written in the most stupid way possible, so that you get the basic legislation, then the exceptions, then items over-riding the exceptions. And by the time you’ve got through it all, you need a very large bottle of gin or other standard rated alcoholic beverage to recover.
So, this weeks’ ruling in the Pringles case REALLY takes the biscuit.
(NB let it be known that I take every responsibility for packing this blog with as many food related puns as possible).
Now the law is this. Cakes are zero-rated. Crisps are standard rated. The law specifically excludes from zero-rating crisps and similar products that are made from potatoes.
Details can be found in the VAT Act 1994, Schedule 8, Group 1 and here http://tinyurl.com/qh8fd on the HMRC website.
Procter & Gamble, the manufacturer, argued that regular Pringles should be zero-rated because potatoes comprise less than 50% of the ingredients – apparently the highest proportion is dough. They also said that the manufacturing method and the uniformity of appearance of the product was sufficiently different from “normal” crisps to exclude it from being a crisp.
Well after several years in the courts, in a case which must rival Jarvis vs Jarvis when it comes to legal fees and just being totally bizarre, the Court of Appeal, that august, important part of our legal and democratic society, has opined that regular PRINGLES ARE CRISPS.
What they actually said is that the “potatoness” of the product means that they should be categorised as crisps for VAT purposes. Another new word for the dictionary.
Now, I’m the first person to stand up for Taxpayers’ rights and I appreciate that it is only right that certain parts of legislation – be it tax legislation, criminal matters or any civil matters – should be properly tested in the courts, when there is any doubt about the issue. And to be fair to Proctor & Gamble, they continued to charge VAT on their sales of the product and include it on their VAT return during the course of the legal proceedings.
But really, there has got to be some better and less costly system to sort these things out. Thousands of pounds of taxpayers’ money has been paid in legal costs arguing the technical issues in cases such as this, or the now infamous Jaffa cake case, there has to be a better way of sorting these things out.
And of course, we still have the bizarre distinction of Pringles Dippers being zero-rated simply because, as a product which requires “dipping” before eating, it comes under a different part of the food schedule which zero rates products which require preparation before consumption.
I’m not sure that I agree that the law is an ass, but there are times it definitely makes me think of a piece of wet fish on a rainy Friday afternoon………