Categorization As Cake or Biscuit For VAT
In the United Kingdom, value added tax is payable on chocolate-covered biscuits, but not on chocolate-covered cakes. McVities defended its classification of Jaffa Cakes as cakes at a VAT tribunal in 1991, against the ruling that Jaffa Cakes were biscuits due to their size and shape, and the fact that they were often eaten in place of biscuits. McVities insisted that the product was a cake, and according to rumour produced a giant Jaffa Cake in court to illustrate its point. After assessing the product on eleven criteria, including "texture", "attractiveness to children" and "consistency when stale", the court found in McVities' favour, meaning that VAT is not paid on Jaffa Cakes in the United Kingdom.
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