Sales Tax Articles
Sales Tax State Activity Update - July 2008
Potato Crisps Still Causing Consternation in UK
Back in August 2007 we reported on the ‘Regular Pringles' Tribunal case where the Appellant argued that Regular Pringles were not standard rated potato crisps because of:
- their regularity of shape which is not found in nature
- the uniform colouring
- texture
- taste
- packaging
- and other differences
HMRC argued that Regular Pringles should be standard rated because they are made from potato flour and because of the similarities they share with potato crisps.
The Tribunal applied a two stage test. In the first stage they held that the ‘ordinary reasonable man on the street' would view Regular Pringles as being similar to potato crisps. In the second stage they held that Regular Pringles were similar to potato crisps because they contained over forty percent potato flour. Based on the two stage test the Tribunal ruled that Regular Pringles should be standard rated.
The case was appealed to the UK High Court which adopted the two stage test previously applied by the Tribunal.
In determining whether Regular Pringles were made from potato, potato flour or potato starch, the High Court decided that the term ‘made from' must mean ‘wholly or substantially' made from. This means that Regular Pringles must contain nothing or substantially nothing other than potato. Applying this approach the High Court found that Regular Pringles were not made from the potato or from potato flour, or from potato starch and should be treated as zero rated.
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