Revenue & Customs v Premier Foods Ltd.

Whether a product is “confectionery” under the VAT Act 1994 is a question of statutory interpretation. The ordinary meaning must be applied in the statutory context. Confectionery must involve some process applied to ingredients, but that process need not be cooking: mixing or compounding may suffice. The product must be sweet, but its sweetness may be inherent in a principal ingredient and need not result from added sweetener. Earlier reasoning concerning a materially different purchase-tax provision cannot be applied. An enlarging statutory definition does not normally narrow the ordinary meaning of the term enlarged.

HM Revenue and Customs assessed VAT of £192,723 on supplies of Hartley’s Fruit Bars. The VAT and Duties Tribunal allowed Premier Foods’ appeal, holding that the bars were not confectionery and were therefore zero-rated. The Tribunal relied on the absence of added sweetener and cooking, together with the bars’ ingredients, taste, appearance and marketing.

HMRC appealed on points of law. The central issue was whether the Tribunal had correctly construed “confectionery” in excepted Item 2 and Note 5 of Schedule 8, Part 2, Group 1 to the VAT Act 1994.

1. Appeal allowed and matter remitted. The Tribunal’s decision was set aside and the question whether the fruit bars were confectionery was remitted to a differently constituted Tribunal for fresh determination. HMRC was awarded the costs of the appeal.
2. The applicable provision was excepted Item 2 and Note 5 in Schedule 8, Part 2, Group 1 to the VAT Act 1994. The meaning of “confectionery” in that statutory context was a question of law. The ordinary-person approach identified in Commissioners of Customs and Excise v Ferraro UK Ltd [1997] STC 881 required the court to determine the legal meaning of the word and its application in context.
3. The Tribunal erred in relying on Commissioners of Customs and Excise v Popcorn House Ltd [1968] 3 All ER 782. That decision concerned materially different purchase-tax legislation and could not be applied to the statutory context of the VAT Act 1994. The Tribunal also misread the reasoning in that case.
4. Confectionery necessarily involves some process applied to ingredients in their natural state, because some process is implicit in the concept of confection. The process need not be cooking; mixing or compounding may be sufficient. Confectionery must ordinarily be sweet, but sweetness may be inherent in the principal ingredient and need not be supplied by an additional sweetener.
5. The specific inclusion in Note 5 of drained, glace or crystallised fruits and sweetened prepared food did not imply that fruits or food generally were excluded from the ordinary meaning of confectionery. An enlarging definition does not normally restrict the width of the term enlarged.

1. High Court (Chancery Division): Appeal from the VAT and Duties Tribunal allowed. The assessment issue was remitted for determination afresh.
2. VAT and Duties Tribunal: On 16 March 2007, the Tribunal allowed Premier Foods’ appeal against the VAT assessments, holding that the fruit bars were not confectionery.