HMRC doesn't quite take the biscuit

In these times of such technologically advanced snacks as the Kit Kat and – gah! – the caramel Hob Nob, not much thought has given to the humble teacake of late – in the UK at least. Across the channel, though, things are entirely different: it seems the snack favoured by grandmothers everywhere has been causing something of a commotion.

The snack has been the subject of lengthy legal battle between Marks & Spencer and HMRC, which charged the chain £3.5m in VAT between 1973 and 1994, after teacakes were wrongly classified as biscuits. In April last year, the European Court of Justice made the judgement that teacakes are, in fact, cakes, and ordered HMRC to pay back the money.

That’s not where the story ends, though – it seems HMRC were characteristically unenthusiastic about paying the money back, saying repaying the total sum would ‘unjustly enrich’ the company, offering instead to pay back the slightly disappointing sum of £88,440.

After 13 years, though, last week finally saw justice restored, as a ruling by the ECJ upheld that the £3.5m should be returned to M&S. 

Smarta can only hope this ruling will bring the tiny cake/biscuit VAT issue to a close, particularly after McVittie’s won a similar ruling on its Jaffa Cakes last year.

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