No dipping out on tax as Walkers’ Sensations Poppadoms deemed ‘crisps’
Walkers’ Sensations Poppadoms ‘are similar to potato crisps’ and therefore are not eligible for the zero-rated VAT, rules Tax Tribunal.
Walkers Snack Foods, the subsidiary of US food giant PepsiCo, appealed a decision by the HM Revenue and Customs (HMRC) that certain products sold by the Walkers are taxable at the standard rate.
Walkers contend that the products should be zero-rated for VAT purposes on the basis that they fall within “item 1 of group 1 of part II to schedule 8 VAT, being ‘food of a kind used for human consumption'”.
It stated that they do not fall within any of the excepted items in that group, while also contending that the products should be zero-rated under the principle of fiscal neutrality.
HMRC argued that the product fall within excepted item 5 of group I, because they are “products [similar to potato crisps, potato sticks, potato puffs] made from the potato, or from potato flour, or from potato starch” and are “packaged for human consumption without further preparation”.
The products the First-Tier Tribunal Tax Chamber had to review were its ‘Sensations Poppadoms’, which are available in two flavours, Lime and Coriander Chutney, and Mango and Red Chilli Chutney.
Judge Anne Fairpo outlined that the two flavours contain 17.5-18 per cent potato granules, 17.5-18 per cent potato starch and approximately 4.25 per cent modified potato starch.
Walkers argued that its Sensations Poppadoms were designed to complement Indian meals and that potato crisps are unlikely to be dipped or eaten as an accompaniment to a meal.
Despite that, the ruling noted that Walkers marketing material on this product showed the products being eaten in settings, which the Tribunal consider are not dissimilar to those in which one would expect to find potato crisps.
The Tribunal concluded last week that the products are made from the potato and potato starch, it is therefore irrelevant whether the products are similar to poppadoms.
It ruled that Sensations Poppadoms are therefore within note 5 and standard rated for VAT purposes.
The Tribunal dismissed Walkers appeal.
A HMRC spokesperson said: “We welcome the decision that Walkers’ Sensations Poppadoms are standard rated for VAT purposes.”
Walkers’ was contacted for a comment.