Strawberries, Cream & 20% VAT
When Marks & Spencer introduced its strawberries and cream sandwich – a summery nod to Japanese “fruit sando” trends and Wimbledon indulgence, it became an Instagram buzz. What it may not have expected? A full-blown VAT conundrum that’s left tax professionals scratching their heads and HMRC possibly rubbing its hands.
At the centre of the debate is a deceptively simple question: Is it a zero-rated sandwich or a standard-rated confectionery product?
Why It Matters?
Unlike classic sandwiches, which enjoy a 0% VAT rate in the UK, confectionery is taxed at the standard 20%. If the M&S strawberry sandwich is ruled confectionery, possibly by fitting under rules for “sweetened prepared foods eaten with the fingers”, then it could see its price increase and its profitability fall.
This isn’t just a foodie fallout. It touches on the age-old problem of defining products in ways the VAT system can understand, a system notoriously absurd when it comes to things we eat.
A History of Food Tax Frustration
The strawberries and cream VAT puzzle joins an honour roll of culinary tax debates that have forced courts to weigh in on what food actually is:
Jaffa Cakes: The classic 1991 case. HMRC argued they were chocolate-covered biscuits (taxable). McVitie’s claimed they were cakes (not taxable). The court agreed they were cakes, partly because they go soft when stale.
Greggs' Sausage Rolls: Sold cold on purpose to maintain their zero-rated status. Warm them up, and they become taxable.
Sensations Mini Poppadoms: In 2024, these were ruled as crisps, even though they were presented differently, because of their ingredients and packagin, thus taxed at 20% despite consumer perception.
KFC Dip Pots: HMRC successfully argued these are part of a hot takeaway meal and thus subject to VAT, underscoring how context of consumption affects classification.
Pringles: Procter & Gamble claimed they weren’t crisps since they contained less than 50% potato. The court decided otherwise, citing enough potato content to classify them as taxable crisps.
As icaew.com reports, this type of nuanced classification can swing on details as specific as the ingredients’ ratio or the way a product is consumed, not just what it looks like on the shelf.
Where Does M&S's ‘Sando’ Stand?
The M&S confection has divided opinion. Structurally a sandwich, it’s white bread around a creamy strawberry filling, it’s also sweet, fruity, and arguably dessert-like. According to retailgazette.co.uk, tax advisors suggest it may fall under a 1980s amendment targeting sweet, finger-held foods.
M&S hasn't said whether they're applying VAT to this item, perhaps wisely awaiting further guidance or litigation.
Whether this sandwich is a light lunch or just a cleverly disguised pudding matters far beyond semantics. The difference? 20% VAT and potentially passed on to consumers or absorbed by M&S. Either outcome affects product viability.
Final Crumbs
This example serves as a reminder that VAT law in the food sector remains notoriously opaque and inconsistent. For businesses dealing in food and drink, staying on top of these quirks is essential to ensure compliance, manage pricing decisions, and avoid potential penalties.
At J-Benn Finance, we help navigate the grey areas between toastie and tart, snack and sweet. If you're in food retail or hospitality and unsure where your product sits, reach out, we’ll help you get it right. No whipped cream required.
