Every day, courts around the world determine cases on a variety of issues, from contractual disputes to complex negligence claims and everything in between. From time to time, the questions put to judges can be bizarre and seem more suited to a pub quiz or an episode of QI than to a courtroom. While seemingly trivial in nature, the classification of food and other products can have a significant financial impact because of the tax implications. Below are some of the best known examples of the real but strange questions decided by the courts.
When does bread become cake?
Just recently, the Irish Supreme Court issued its decision in a case relating to the sandwich chain, Subway. Bookfinders Ltd v The Revenue Commissioners was a case commenced by Subway’s Irish franchise as they sought a refund for VAT paid in respect of their sandwich products. As a staple food, bread is a zero-rated product for VAT purposes. However, “bread” is further defined by the legislation rather than being left to its ordinary meaning. The relevant Act specifies that the weight of sugar in the dough should not be more than 2% of the weight of the dough. Subway’s recipe involves 10% sugar. The court considered the correct interpretation of this legislation to be clear, resulting in the legally accurate but strange conclusion that the sandwiches eaten by millions worldwide can in fact be considered to be made from confectionary rather than bread under Irish law.
Where do you draw the line between cakes and biscuits?
Perhaps the most famous food based debate was that considered in the United Biscuits case. For VAT purposes, whether a Jaffa cake is a chocolate covered cake or a chocolate covered biscuit is a very important distinction. Cakes are zero-rated whereas biscuits have tax applied. The Tribunal heard a raft of arguments and expert evidence before determining that while Jaffa cakes had characteristics of both, they had significant enough characteristics to be considered cake.
What are Pringles?
A seemingly obvious question but one which found itself in the Court of Appeal in England in 2009. The precise matter in dispute in HMRC v Proctor & Gamble UK was whether Pringles are “similar to potato crisps and made from the potato?”. A previous decision had found that Pringles, which contain a relatively low percentage potato flour mixed with other ingredients, were not crisps in terms of the definition for determining whether VAT should be applied. Proctor & Gamble used the term “savoury snack” instead and while they were able to persuade the initial tribunal that this may be the case, the appeal court was not convinced. After a lengthy consideration of the properties of the snack, the court determined that the sensible interpretation was to classify Pringles as a crisp.
Are tomatoes a fruit or a vegetable?
While tomatoes are a staple of savoury dishes, it is a popular claim that they are in fact a fruit because of their seeds. The point came before the United States Supreme Court in the case of Nix v Heddon in 1893. A decision of a lower court was appealed to the Supreme Court by a seller of fruits and vegetables who was unhappy to be taxed on the import of tomatoes. The tax did not apply to fruits and he argued that as tomatoes were botanically classified as a fruit, they should not be taxed as a vegetable. The court did not agree and, in a decision unlikely to please culinary pedants, the ordinary meaning was held to apply. Tomatoes were commonly viewed as vegetables and should be taxed as such.
Are superheroes human?
And finally, in a bonus non-food related example, the case of Toy Biz v United States required, in 2003, to consider the classification of Marvel action figures as toys or dolls. The key factor here was whether the figures could be classed as human figures or non-human creatures. It was determined that, despite having many human characteristics, the complete range of figures, including the X-Men, were non-human creatures and subject to the lower tariff. This is a decision which is somewhat controversial to comic book fans!
Blog by Amy Haughton, Solicitor