M&S in HMRC row over Wimbledon strawberry and cream sandwich
Under HMRC rules, most cold food, including sandwiches, is zero rated for VAT, but many sweet treats are counted as luxuries, and the 20 per cent levy is added – and must be paid to HMRC by businesses.
The £2.80 “game-changing” limited edition Red Diamond Strawberry & Creme Sandwich is filled with the fruit and light whipped cream cheese on fluffy sweetened bread, the retailer said.
And that’s where the issue gets tricky, says Rachel Harris, on her Instagram account accountant_she: “Most food, including sandwiches, is zero rated for VAT, meaning that we as customers don’t pay VAT, and the businesses who sell them get better margins by keeping the sales prices low.
“But some food becomes taxable if it’s classified as non essential, and this is things like confectionery and biscuits. So M&S are arguing that because it is packed like a sandwich, filled like a sandwich and is marketed like a sandwich, it is a sandwich, and so it should be zero rated for VAT.
“HMRC says something counts as confectionary when it is sweet and eaten with your fingers. So the tax experts are arguing that the bread is actually sweetened and it’s eaten with your fingers and is therefore confectionary, which should have 20% of VAT included in the price.
“So we will be seeing this argument between M&S and HMRC in court.”
M&S said its latest creation was inspired by Japanese “sweet sandos”, or fruit sandwiches.
M&S said: “Inspired by the Japanese sweet sandos, recently spotted popping up in London’s trendiest Japanese patisseries, our product developers have long dreamed of creating a dessert sandwich.
“With our exclusive Red Diamond Strawberries at their juiciest best, the time has finally come to create the ultimate strawberries and creme experience.
More M&S news:
“From alfresco lunches, afternoon tea at home, summer picnics, courtside snack breaks or a sweet afternoon pick me up, the Red Diamond Strawberries & Creme Sandwich is your go-to summer indulgence, wherever, whenever.
M&S Food first sold freshly made sandwiches in the 1920s, and expanded sales with pre-packed sandwiches in the 1980s.
The retailer’s food halls have sold four billion sandwiches to date.