Walkers Snack Foods Limited v The Commissioners for HMRC

For VAT classification, the question whether a snack is made from potato and similar to potato crisps is a composite, practical question. Potato granules may fall within “the potato”. No fixed percentage of potato content is required. The assessment of similarity is multifactorial and depends on the overall impression created by all the facts. An appellate tribunal should interfere only where the first-instance tribunal reached a conclusion so unreasonable that no reasonable tribunal, properly construing the legislation, could have reached it. Product names, flavours, ingredients and manufacturing methods may be relevant, but need not determine the result individually.

Walkers appealed against the First-tier Tribunal’s decision of 15 March 2024, which dismissed its appeal against HMRC’s decision that sales of Sensations Poppadoms were standard-rated for VAT. The FTT held that the products fell within excepted item 5 to Group 1, Part II, Schedule 8 to the Value Added Tax Act 1994, because they were made from potato or potato starch and were similar to potato crisps.

The appeal raised issues of statutory interpretation and alleged errors in the FTT’s multifactorial assessment, including the treatment of the products’ name, flavours, gram flour content and manufacturing process.

1. Appeal dismissed. The FTT had not erred in law in concluding that Sensations Poppadoms fell within excepted item 5.
2. The statutory language was to be interpreted by reference to its ordinary meaning, context and purpose. In this case, “the potato” was capable of including potato granules. The FTT’s conclusion was neither untenable nor a plain misapplication of the law to the facts.
3. There was no fixed minimum percentage of potato content required for a product to be “made from” the potato, potato flour or potato starch. The FTT was entitled to take the potato granules, potato starch and modified potato starch together, producing approximately 39–40% potato-derived content.
4. The question whether the products were “similar” to potato crisps was a composite and multifactorial classification exercise. The FTT was entitled to consider packaging, sale through snack-food channels, appearance, texture, flavour, ingredients, manufacturing process and the overall consumer perception.
5. The FTT’s treatment of the product name as having no weight was not its best reasoning, since “poppadoms” and “potato and gram flour snacks” were customary descriptions rather than merely brand names. However, that point was only a minor part of the overall assessment and could not affect the result. The FTT was also entitled to conclude that the distinctive flavours, gram flour and different manufacturing process did not outweigh the overall similarity to potato crisps.
6. On appeal, the issue was whether the FTT had reached a conclusion so unreasonable that no reasonable tribunal, properly construing the statute, could have reached it. That threshold was not met. The appeal was dismissed. Any costs application was to be made under rule 10(5)(a) and (6) of the Tribunal Procedure (Upper Tribunal) Rules 2008.

• First-tier Tribunal: On 15 March 2024, dismissed Walkers’ appeal against HMRC’s decision that Sensations Poppadoms were standard-rated for VAT.
• Upper Tribunal (Tax and Chancery Chamber): Dismissed the appeal and upheld the FTT’s decision.