Mini-Poppadoms Standard-Rated for VAT, UT Confirms

The Upper Tribunal (UT) has dismissed a snack food manufacturer's appeal against a decision that bags of mini-poppadoms it produced were standard-rated for VAT as the mini-poppadoms were made from potato and were similar to crisps.

Part II, Group 1 of Schedule 8 to the Value Added Tax Act 1994 provides that food of a kind used for human consumption is zero-rated for VAT purposes. However, an exception applies to potato crisps and 'similar products made from the potato, or from potato flour, or from potato starch' when packaged for human consumption without further preparation. After HM Revenue and Customs decided that sales of the mini-poppadoms should be treated as standard-rated, the manufacturer appealed to the First-tier Tribunal (FTT).

The mini-poppadoms' ingredients included potato granules and potato starch, as well as gram flour, which is used to make traditional poppadoms. They were primarily sold in the snack food aisles of major retailers, and neither the marketing material nor the packaging indicated that they were intended to be part of a meal rather than a snack food.

The FTT found that the term 'the potato' included potato granules, and that the mini-poppadoms contained more than enough potato content to fall within the exception. Conducting a multifactorial assessment, the FTT concluded that the mini-poppadoms were similar to crisps. The manufacturer's appeal was therefore dismissed.

In its further appeal to the UT, the manufacturer argued that the FTT had erred in treating products made from potato granules as falling within the exception, and in finding that the mini-poppadoms were made from the potato. It also claimed that, in conducting its multifactorial assessment, the FTT had erred in not giving any weight to the fact that the products were called poppadoms, the specific flavours of the products, or the inclusion of gram flour as an ingredient. It had also ignored fundamental differences between poppadoms and crisps.

The UT considered that the FTT was more than entitled to find that the words 'the potato', given their ordinary meaning, should be read to include potato granules. Noting that the mini-poppadoms had a potato content of about 40 per cent, including potato granules, the UT found that the conclusion that they were made from the potato was one that the FTT was entitled to reach on the facts.

Whether the mini-poppadoms were similar to potato crisps was a question of degree, requiring the fact-finding tribunal to conduct a multifactorial assessment and reach a reasonable view on the basis of all of the facts. With regard to the weight to be given to the name of the products, the question for the FTT was whether the mini-poppadoms were similar to crisps, not whether they were poppadoms. The FTT had taken into account that crisps are available in a very wide range of flavours, and had considered arguments concerning the addition of gram flour and its effect on the taste and texture. While it might be possible to disagree with the weight given to individual elements of the multifactorial assessment, the overall assessment was well within the bounds of reasonable decisions that the FTT was entitled to reach on the evidence.