Tuesday, January 4, 2011

VAT now 20% in the UK & Why Jaffa Cakes are Tax Free!!


In case you missed the news, VAT is now 20% in Britain. It makes the 9.75% we pay in California seem a pittance.
No tax for Jaffa Cakes though! Under UK law, no VAT is charged on plain biscuits and cakes Chocolate covered biscuits, however, are subject to VAT. McVities classed its Jaffa Cakes as cakes, but in 1991, this was challenged by Her Majesty's Customs and Excise and the case ended up before the courts. The court asked "What criteria should be used to class something as a cake?" McVities defended its classification of Jaffa Cakes as cakes, producing a 12" (30 cm) Jaffa Cake to illustrate that its Jaffa Cakes were simply miniature cakes. McVities argued that a distinction between cakes and biscuits is, among other things, that biscuits would normally be expected to go soft when stale, whereas cakes would normally be expected to go hard. It was demonstrated to the Tribunal that Jaffa Cakes become hard when stale.

1 comment:

  1. You forgot to mention that we also pay 10% state tax in California, so that makes it 19.50% tax.

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