HMRC loses £300k chocolate brownie VAT case

A health food brownie containing dates and brown rice bran has been deemed a cake – and so free from VAT charges – after a judge taste-tested the product alongside Mr Kipling’s French fancies and Tunnock’s teacakes.

Pulsin, makers of the brownies, could reclaim up to £300,000 from HMRC after Judge Amanda Brown ruled in the Gloucestershire-based manufacturer’s favour, saying the company’s Raw Choc Brownies would “absolutely not look out of place” at “a cricket or sporting tea”.

Brown dismissed Pulsin’s claims that the brownies were “not sweet enough” to be considered confectionery, on which VAT is charged, but said this did not exclude them from being cakes.

Unlike sweets, cakes are considered to be a staple food and therefore zero-rated for VAT. Biscuits are also zero-rated unless they are a luxury item, which usually means they have chocolate on top.

Brown said the ingredients used in making the brownies, the manufacturing method, their taste and texture were all “consistent with those of a cake”.

The dispute began in 2016 when Pulsin said it had wrongly been paying VAT on the products for four years.

An HMRC spokesman said: “We are carefully considering the decision in this case.”

The judge’s ruling referred to the 1991 Jaffa Cakes case when McVitie’s successfully argued that the product was a cake and not a biscuit and so not liable for VAT.


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