It was a question that not only took the biscuit, but also made John Brown’s name in the rarified world of Value Added Tax. Is a Jaffa Cake a chocolate-covered biscuit or a cake? The distinction matters: plain biscuits are non-luxury food items and do not attract VAT. Likewise, following the lead set by Marie Antoinette, cakes are essentials.
However, chocolate-covered biscuits are luxury items akin to confectionery and are therefore liable for VAT. Jaffa Cakes were introduced by McVitie’s in 1927. With the start of VAT in 1973, Customs & Excise took the “Cake” label at face value, meaning that they were zero-rated.
However, a review in January 1991 led to a change of heart. Jaffa Cakes were denounced as chocolate-covered biscuits with orders that VAT, which that year increased from 15 to 17.5 per cent, should be added to their price.
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