The next time you look at a pack of Jaffa Cakes, you may think about them slightly differently – and you may be glad that the price isn’t a teeny bit higher.
You see, there was a famous (or perhaps that should be infamous) court case a few years ago in which it was disputed whether or not the Jaffa Cake should be subjected to the standard rate of VAT.
You might wonder why this was all such a drama. But the disagreement actually lay in whether the humble Jaffa was a cake or in fact a biscuit in disguise. It may not seem to matter on the surface, but the reason is because cakes are not subjected to any VAT at all, whereas biscuits are. This is why McVitie’s, the makers of Jaffa Cakes, wanted them to be known to all and sundry as cakes.
As bizarre as this may sound, the makers decided to use a proven fact as the core of their argument to keep Jaffa Cakes free of VAT. Think about what happens to both biscuits and cake when they become stale. Biscuits invariably become softer and aren’t as easy to snap in half as a result. But cakes, meanwhile, go hard. And if you have ever left a Jaffa Cake unattended in the fresh air for any length of time, you will know that it has a tendency to go rock hard.
This was one of the two factors which led to McVitie’s winning the case and the UK government admitting defeat. The other factor was the production of a huge Jaffa Cake, so everyone involved with the case could see that it was in fact a cake and nothing like a biscuit.
And since then the humble Jaffa has remained thankfully free from VAT. It also ranks as one of the fifteen curious facts listed in this article by the Scotsman.com.
In the end most of us probably won’t care whether they are a cake or a biscuit, although being classed as cakes so far as the VAT man is concerned means that we won’t pay quite so much for the privilege of munching on them.
It does highlight the fact that charging VAT on items isn’t always as clear cut as it should be. Some items will attract the full rate, some the reduced rate, and others – such as the Jaffa – won’t attract any at all. But which items fall into which category is not, as it has been shown, always that easy to determine.
Apparently a normal biscuit is free from having any VAT charged on it. But chocolate biscuits are a different matter – hence why the government wanted Jaffa Cakes to be classed as Jaffa Biscuits instead. Our love of the little round things would have meant another swelling of the coffers as far as the powers that be were concerned.
Luckily though McVitie’s won the fight, and we can all continue to enjoy cheaper Jaffa Cakes for the foreseeable future.