One question that’s come up time and time again is: when is food really ‘food’, and when is it counted as ‘confectionery’?
The latest case to hit the headlines involves Mega Marshmallows—those oversized marshmallows perfect for toasting over a fire or barbecue. You’d think marshmallows are marshmallows, right? But for VAT purposes, the distinction could mean the difference between zero-rated or standard-rated sales.
Here’s what’s happening:
👉 Under UK VAT law (Group 1 of Schedule 8, VAT Act 1994), food is generally zero-rated for VAT. But there’s a list of ‘excepted items’—things that don’t qualify for the zero rate, like confectionery.
👉 ‘Confectionery’ is defined broadly. It includes chocolates, sweets, biscuits (with some exceptions), and “any item of sweetened prepared food which is normally eaten with the fingers.”
That last bit—“normally eaten with the fingers”—is where the marshmallow debate heats up.
The Mega Marshmallow Case
In HMRC v Innovative Bites Ltd [2025] EWCA Civ 293, the Court of Appeal ruled that earlier tribunals hadn’t given enough weight to how Mega Marshmallows are normally eaten. Are they a snack you eat straight from the bag with your fingers (like regular marshmallows)? Or are they mainly designed for toasting—usually eaten off a skewer, albeit held in your hand?
The Court of Appeal has sent the case back to the First-Tier Tribunal to answer that exact question. Until they decide, the VAT position remains unclear.
Why it matters for businesses
If you manufacture, import, or sell products like Mega Marshmallows, getting the VAT treatment wrong could mean unexpected VAT bills, penalties, or pricing issues. The distinction between zero-rated and standard-rated VAT might seem small—but it adds up quickly.
✅ At A&C Chartered Accountants, we’re here to help small businesses navigate these tricky VAT rules, so you stay compliant and profitable. If you’re unsure whether your product counts as food or confectionery (or if you’ve got a quirky product that doesn’t fit neatly into a box), get in touch with our team for advice.
We’ll keep an eye on this case and update you when the tribunal makes its ruling. In the meantime, let us take the headache out of VAT—so you can focus on growing your business.