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When is a cake a cake? Lees of Scotland and Tunnock's win landmark tax appeal

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By Cameron Clarke, Editor

June 28, 2014 | 2 min read

Two Scottish confectionery firms have won a landmark tax ruling after successfully arguing that their snowballs should be classed as cakes.

Lees of Scotland and Tunnock's appealed to the First Tier Tax Tribunal to challenge HM Revenue and Customs' decision that the snowball product should not enjoy the same VAT exemption as tea cakes.

The tribunal had to consider whether the snowball bore the same characteristics that an ordinary customers would recognise as a cake, and were presented with plate of Jaffa Cakes, Bakewell tarts, tea cakes, Lees Snowballs, Waitrose meringues and mini jam snow cakes to help them make up their minds.

After careful deliberation, the tribunal concluded in its written ruling: “A snowball looks like a cake. It is not out of place on a plate full of cakes. A snowball has the mouth feel of a cake.

“Most people would want to enjoy a beverage of some sort whilst consuming it. It would often be eaten in a similar way to cakes; for example to celebrate a birthday in an office.

“We are wholly agreed that a snowball is a confection to be savoured but not whilst walking around or, for example, in the street.

“Most people would prefer to be sitting when eating a snowball and possibly, or preferably, depending on background, age, sex etc with a plate, a napkin or a piece of paper or even just a bare table so that the pieces of coconut which fly off do not create a great deal of mess.

“Although by no means everyone considers a snowball to be a cake we find that these facts, in particular, mean that a snowball has sufficient characteristics to be characterised as a cake.”

The decision spares the two firms a combined tax bill of £2.8m.

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