This was an appeal by HMRC against the decision of the First Tier Tribunal (FTT) allowing the taxpayer's appeal against HMRC's decision that supplies of its food product 'Mega Marshmallows' were standard-rated supplies of confectionery pursuant to Excepted Item 2 of Group 1 of Schedule 8 to the VAT Act 1994.
The conclusion reached by the FTT was that Mega Marshmallows were not confectionery and that the supply was therefore zero-rated. The conclusion was based on the findings that Mega Marshmallows were sold and purchased as a product specifically for roasting. The FTT considered the marketing, the packaging, the size of the product, the positioning in supermarkets and the seasonal fluctuation in sales when reaching its findings.
HM Revenue and Customs (HMRC) submitted that Note 5 was a deeming provision; if an item fell within a description in Note 5, it was automatically within the ambit of Item 2 and that is the end