After the British Treasury (HMRC) has already lost the lengthy tax dispute over the “Mega Marshmallows” twice, the company announced that it intends to appeal again.
Last month, the Upper Tax Tribunal agreed with a Lower Tribunal ruling that the “mega marshmallows” sold by London-based American candy and treat wholesaler Innovative Bites were not confectionery and therefore remained exempt from VAT.
It also agreed with the lower court’s findings that the product was marketed and sold specifically for roasting and that the size of the giant marshmallows alone made it clear that the product was different from the smaller standard-size marshmallows.
However, according to an update from HMRC on its VAT appeals on Thursday, the company has said it is seeking permission to appeal the decision, continuing to argue that ‘mega marshmallows’ are confectionery and should have been subject to the standard rate of VAT.
Commenting on the decision, Glyn Edwards, VAT director at accountancy firm MHA, said: “We all thought this would be the end of the debate over the tax on giant marshmallows, but HMRC has decided to appeal again in the hope of finally convincing the tax authorities that size isn’t everything.
“The public might seriously question whether this is really the best use of taxpayers’ money when we all know that the best lawyers have spent decades trying to somehow understand the VAT limits on food,” he added.
Jilly McCullagh, director of the VAT consultancy firm working with Innovative Bites on this case, said: City AM that HMRC’s decision was “disappointing”.
“Is this really in the best interest of taxpayers’ money?” she asked. “Where and when does this stop?”
When asked for comment, a HMRC spokesman said: “We are seeking permission to appeal (the High Court’s) decision to the Court of Appeal.”
