More on teacakes!!

My many fans, (!) will be aware of my past postings on the subject of futile tax cases concerning various foodstuffs.  With this in mind, it was with great excitement that Gerry, my loyal PA burst into my room this morning and advised me that she has just heard on the radio that Marks and Spencer’s had won their teacakes tax case in the European Courts. 

 Now apart from the major significance of this news in the current economic climate, what is of more significance is the fact that she knew it before I did on a day when I was supposed to be attending a tax course of all things.

Mulling over this shock to the system, I realised perhaps that it is a mark of the influence that I have over other people’s lives that she shows such interest in these major tax issues (!), and no doubt, in due course, we will perhaps go out for drink together and discuss other tax cases together.  Both of us no doubt can’t wait!

Trying to be serious for a moment, and for those of you who are new to all of this, the case centred on whether a teacake was a biscuit or a cake and the verdict effected the VAT position.  This dispute, which had been raging for 13 years, between M&S and the tax man over whether VAT is payable on teacakes has now ended after the Revenue & Customs abandoned its last line of defence. 

My issue with the whole matter of course is not whether that this was a point of law that had to be resolved, but just the fact that it takes so long and costs so much to do so.  In fact, according to Deloitte the accountancy firm that represented M&S, the Revenue is potentially facing many similar claims totalling over £100m.  It’s therefore no surprise that  HMRC weren’t prepared to simply concede the point without a fight.

The case had been referred to the European Court of Justice twice and great legal minds had spent many hours, days, weeks and months exploring whether a teacake was in fact a cake or a biscuit.  In fact, it has now been accepted that a teacake is in fact a cake which is not liable for VAT.

I suppose the conclusion I reached from all of this other than the fact that Gerry obviously has great potential in the tax world, is that so many disputes come about, because of badly drafted legislation.  To distinguish for VAT between cakes and biscuits is to me just ridiculous.  What can possibly be the logic between certain food stuffs being vatable and others not.  Anyway I am absolutely positive we haven’t heard the last of this and I will be consulting Gerry again for her opinions in due course.

HG