Large marshmallows are not a sweet, the judge rules

“Roasting marshmallows causes physical changes to the product,” the judges said. Credit: Campfire Marshmallow Roasting/By Getty Images

Campfire marshmallow roasting just got even sweeter after judges ruled the treats shouldn't be subject to VAT.

Innovative Bites, a company that imports American products, successfully proved it. that its Mega Marshmallows are ingredients, not sweets, and should therefore be exempt from the 20 percent tax.

Sweets intended to be eaten straight from the package are subject to VAT, whereas ingredients for further processing, such as making chocolate, are not subject to VAT.

The company made the argument that its marshmallows should be grilled before being eaten. legal battle over a tax claim worth almost half a million pounds.

Innovative Bites won a trial against the taxman in 2022 and has now secured a second victory after the taxman lost his case at the Upper Tribunal.

Judge Phyllis Ramshaw and Justice Nicholas Alexander at the Supreme Tribunal said they could find no reason to overturn the original decision.

The original tribunal found that «the size of the packaging and the product itself do not allow us to know that it can be eaten on the go, like a packet of sweets, a small bag of regular marshmallows or mini marshmallows.»

Its location in supermarket aisles is also important as Mega Marshmallows are often found alongside barbecue products.

Evidence showed that sales were higher in the summer months «because they are more likely to be purchased to be grilled», found original tribunal.

The Upper Tribunal added this, contrary to Her Majesty's opinion. Income & Customs (HMRC) states that toasting marshmallows has an important effect on the treat, meaning the process can be considered akin to cooking.

“Roasting marshmallows causes the product to physically change, caramelizing the outer shell and melting the inside «, said the judges.

The exact method of consumption of the sweets has been the subject of heated debate at the tax tribunal. The law specifies that VAT applies to «any sweetened prepared food usually eaten with the hands» rather than with a toasting stick or fork.

HMRC was chasing Innovative Bites for an amount it believed was £472,928. in the form of VAT payments for sales made between 2015 and 2019.

This is not the first marshmallow to be exempt from VAT. The ruling notes that tiny marshmallows used in baked goods are not taxed because they are a cooking ingredient and not a finished product.

This is not the first legal battle over the issue of taxing sweets and snacks. A previous court ruling ruled that Jaffa Cakes are indeed VAT-exempt cakes and not biscuits, which are subject to tax.

Earlier this year, Walkers lost the battle for its Sensations Poppadoms after the taxman successfully argued in a dispute. they were essentially chips and as a result they should have been subject to VAT.