Has M&S’s Viral Strawberry Sandwich Landed Them In A Jam With HMRC?

You can find the original article on the Mitchell Charlesworth site here.

No doubt your social media newsfeed has been jam-packed with posts about M&S’s new ‘Strawberry & Creme’ sandwich, which has caused quite a stir… but maybe not for the reason M&S initially intended!

Dividing opinions not just on taste but on classification too, the controversy lies in whether this viral sensation should be classed as a sandwich or, in fact, a dessert. And whilst it may sound like a rather petty argument, the difference is costly. That’s because sandwiches are zero-rated for VAT whereas many sweet treats are rated at 20%.

And this isn’t the first time that food manufacturers have got themselves into a pickle with HMRC; let’s not forget the Walkers’ mini poppadoms and Mega Marshmallows disputes or the famous ‘is it a cake or a biscuit’ Jaffa Cake saga. The rules are far from clear, and it would seem that M&S has, quite ironically, sandwiched itself in the middle of an ambiguous debate.

This isn’t just a sandwich, it’s an M&S sticky situation…

Described by M&S as “sweet and juicy British Red Diamond Strawberries with a thick layer of whipped cream cheese on a sweetened bread, it may look like a dessert but you’ll find this exclusive treat at home with the rest of our sandwiches!”, the company is making a clear statement that it views its latest creation as a sandwich, which falls under the zero-rated VAT category.

However, this is where things really take the biscuit. Many items deemed as non-essential are rated at 20% VAT – this includes confectionery such as chocolates, sweets and some biscuits… but not all biscuits and definitely not cake. Confused yet? Wait, there’s more to add to the mix!

HMRC classifies confectionery as “any item of sweetened prepared food, other than cakes and non-chocolate biscuits, which is normally eaten with the fingers”, which you could easily argue applies to M&S’s strawberry sandwich. And that’s exactly what many tax experts are doing. So could we really witness yet another food-related VAT conundrum playing out in the courts, this time with HMRC arguing whether a sandwich is a sandwich?! It’s looking very likely!

But hang on – aren’t sandwiches eaten with fingers too? Yes! The key difference here is that traditional sandwiches are savoury, not sweet, so the odds aren’t looking too great for M&S.

Don’t trigger a tax tummy ache with HMRC – seek VAT classification advice!

Understanding VAT ratings can be incredibly difficult, especially in the food industry where definitions are complex and often open to interpretation. And this blog goes to show that even major corporations struggle to get it right. That’s why it’s so important to seek an accountant’s advice if you’re ever worried about VAT classification. We’re here to help, to advise you and to ensure you don’t end up going viral for the wrong reasons… well, for tax-related reasons anyway! Please reach out to our experienced team for further information – you can contact us directly or why not take advantage of our free, no-obligation consultation?

Now, please excuse us whilst we try get our hands on one of these legendary sandwiches (cough* desserts *cough) to taste test – all in the name of research of course! Have you managed to try one yet? What’s your verdict: sandwich or dessert?