VAT on Food – a complex minefield

If you sell food for human consumption, it can be zero rated (unless it is supplied in the course of catering) or an “excepted item”.

Confectionery is standard rated, but this does not include cakes or biscuits so these are zero-rated unless the biscuit is covered with chocolate in which case it is standard rated. Cakes covered in chocolate are zero-rated. What about Jaffa cakes? Are they biscuits (standard rated) or cake (zero rated)? A court decided they are cakes. There are other court cases too.

A frozen yoghurt has a different VAT liability to yogurt that is frozen but intended to be eaten at a temperature above freezing!

Different flavours of Nesquik milkshake powder have different VAT liabilities – Strawberry and banana are standard rated – chocolate flavour is zero rated!

A gingerbread man with two dots of chocolate for eyes is zero-rated – add a belt or chocolate buttons and it becomes standard rated as being partly covered with chocolate!

Are you correctly recording sales as standard or zero-rated? Contact us for assistance.