Yes the VAT man wanted it to be a biscuit. That way it would fall by virtue of its chocolate coat into a category of products liable to VAT at the standard rate, i.e. luxury biscuits. As a cake however it is zero rated for VAT, no matter how luxuriant, much to the VAT man’s continuing annoyance. In fact Wifey and I once had a chat with ex Tory Minister John Knott who brought in VAT when the Conservative Government of the time took Britain into the Common Market. He recalled that the whole VAT introduction went surprisingly well expect for the Jaffa cake which caused all sorts of problems. In 1991 the matter went to a tribunal (number 6344 in case you were wondering) in which the VAT man argued that the Jaffa wasn’t a cake and so should not be exempt from VAT (VATA 1983 Sch 5 Group 1 excepted item 2), trotting out all the old arguments. McVities countered with all of the other old arguments plus a specially prepared 12 inch Jaffa Cake, which focused the tribunal’s attention on the sponge base. The tribunal concluded that, while the product also had characteristics of biscuits or confectionery which was not cake, it had sufficient characteristics of cakes to be a cake for the purposes of zero-rating. (The tribunal also determined that the product was not a biscuit.)
