The British are famous for many things: tea, the weather and, of course, biscuits. Every year we eat an exponential amount of shortbread, digestives and other baked snacks. But what is a biscuit? And, more importantly, do Jaffa Cakes fall into this category, contrary to their name?
In 1991, McVite’s famously appealed a decision to categorise Jaffa Cakes as biscuits in a VAT tribunal, which had required the company to pay higher VAT rates. In order to do this they baked a giant Jaffa Cake to demonstrate the cake like attributes of the snack.
While the name was considered by the courts, as well as the ingredients and cake like texture, it was ruled the snack was more akin to a biscuit, due to the marketing and sales. Jaffa Cakes are sold in the supermarket with other biscuits, and their usual size means they are more like a sweet than a cake.
The purpose of the giant Jaffa Cakes was to easily demonstrate how the biscuit reacted to moisture, as cakes are known to harden when stale, while biscuits go soggy. However, their 12% moisture content has been used to define the Jaffa Cake as a biscuit in Ireland, meaning VAT is charged (Customs 2017).
How to clearly define food types is not an issue unique to courts in the UK, recently a court in the US was forced to rule that tacos, burritos and quesadillas are not forms of sandwich (White City v PR Restaurants 2006). While it has been noted that different rates of VAT for different types of product has some benefits over the American system of VAT, defining food types is an inherent problem (Gale 1997).
Has it changed the way we define our foods for the purposes of law?
Other food companies have sought to rely on the Jaffa Cake tribunal decision, including Lees of Scotland Ltd (Lees of Scotland Ltd, Thomas Tunnock Ltd v The Commisioners for HMRC 2014) and the supermarket Asda (Asda Stores Ltd v The Commisioners for HMRC 2009). Although, there have been some cases which did not rule in favour of the producer. In 2009, Procter and Gamble lost their case in the Court of Appeal, failing to redefine the Pringle, and were ordered to pay nearly £100m in owed taxes.
Sadly, the case doesn’t quite resolve the ‘cake or biscuit’ conundrum which has divided the nation for some time. However, it does highlight the many lengths companies will go to to protect their brand categorisation, and the many topics of justice explored within our legal system.