Build-A-Bear to foot £660,000 bill after legal battle over its toys’ shoes
A BIZARRE legal battle over teddy bears’ shoes – and their use on dolls’ feet – has ended with a toy manufacturer facing a £660,000 tax bill.
At the centre of a three-year court fight between Build-A-Bear Workshop and HMRC is a law stating that accessories for stuffed toys attract 4 per cent customs duty while those for dolls do not. The firm claimed that as the shoes it makes for its toys are ‘equally suitable for BAB (Build-ABear) bears as for BAB dolls’, they should attract no duty.
But the Court of Appeal ruled in favour of HMRC, with Lady Justice Whipple concluding the footwear in question was ‘suitable principally for use with BAB bears’.
It means the British wing of the US company now faces the huge tax bill on accessories such as shoes, clothes and wigs worn by its cuddly toys dating back to 2012.
The firm lets children stuff their own toys and pick out accessories. It started with bears but also has ranges of stuffed dolls.
All the accessories in the dispute are used for both bears and dolls but at the beginning of the tax fight at the First Tier Tribunal in 2019 Judge Harriet Morgan ruled in favour of HMRC. She said ‘whilst the clothing items can plainly be used on any toy or doll of an appropriate size… they are, according to their objective design characteristics, suitable principally for use with stuffed toys’.
She went on to examine the disputed shoes and ruled they were ‘suitable for use principally with stuffed bears’. After the Upper Tribunal backed her decision last April, Build-A-Bear Workshop appealed, arguing that the findings were ‘illogical’ because ‘bears do not wear shoes’.
But Lady Justice Whipple, sitting with two other judges, dismissed the appeal, ruling that the disputed items – including the footwear – should be classified as designed for stuffed toys.