Sorry Mr Taxman, marshmallows are just NOT sweets!

THEY’RE not much more than sugar and air and yet, according to the country’s highest tax authority, marshmallows are most definitely not sweets.

An ‘American candy’ company argued that its giant marshmallows were cooking ingredients – and judges presiding over Britain’s top tax tribunal agreed.

The ruling meant that innovative Bites ltd, which imports US style ‘sweets and treats’, won’t have to pay a £470,000 VAT bill.

it had already won its case at a tax tribunal in 2022 but HmRC challenged the ruling in the Upper Tribunal, arguing the Baking Buddy mega marshmallows must count as confectionery because they can be ‘ eaten with the fingers’.

Handing victory to innovative Bites for a second time, judges ruled the marshmallows are taxexempt because they are often eaten hot off a stick and more packs are sold during barbecue season.

VAT is payable on confectionery, but products such as dark chocolate can be zero-rated if they are used for cooking.

The Upper Tribunal heard that, after being handed a massive tax bill for the period June 2015 to June 2019, the loughborough based firm went to a tax tribunal to argue the large marshmallows were in fact ‘ingredients’.

They referred to S’mores – a US treat where roasted marshmallows are sandwiched between chocolate biscuits.

its lawyer said mega marshmallows were 5cm in height, compared with 2.5cm for ordinary marshmallows, and intended for roasting. HmRC argued that they could still be eaten ‘ on the go’ like a bag of sweets.

Judge Phyllis Ramshaw, sitting with Judge nicholas Aleksander, said: ‘There is no doubt that the product is a confection produced by mixing ingredients, and that it is sweet. it therefore bears the fundamental characteristics of confectionery. ‘However, confectionery is not generally subject to cooking, in order to be enjoyed as intended.’

The judge added that higher sales between may and October also suggested the marshmallows were more likely to be bought to be roasted over a flame.