The M&S Strawberry Sandwich Sparks Another Great British VAT Debate

M&S recently launched their limited-edition ‘Red Diamond Strawberry & Crème’ Sandwich, combining “the UK’s sweetest strawberries” with light whipped cream cheese on sweetened bread, inspired by Japan’s popular sweet sandwiches.

However, this viral sandwich is prompting questions over whether it should be classified as a standard sandwich (which is zero-rated for VAT), or as a confectionery item (subject to 20% VAT).

Why does it matter?

The implications extend far beyond M&S’s bottom line. If HMRC decides this strawberry creation is confectionery rather than a sandwich, it could set a precedent that affects how we classify other sweet treats masquerading as everyday food items.

Cold sandwiches are typically zero-rated for VAT, meaning no tax is added to the price. But HMRC states that food which is “wholly or partially covered in chocolate is a luxury” and therefore subject to higher taxation.

The Jaffa Cake Precedent

This isn’t the first time Britain has found itself in a heated debate over food classification. The famous Jaffa Cake VAT tribunal in 1991 saw McVitie’s successfully argue that their product was a cake (zero-rated), rather than a biscuit (standard-rated).

HMRC had accepted since the start of VAT that Jaffa cakes were zero-rated as cakes, but always had misgivings about whether this was correct.

The Jaffa Cake case established important precedents about how HMRC approaches food classification, and those same principles might now apply to M&S’s strawberry creation.

What makes this different?

Unlike the Jaffa Cake debate, which centred on whether something was a cake or biscuit, the question raised here is whether something can be both a sandwich AND confectionery. The M&S creation sits in that grey area where traditional food categories blur.

The product’s viral popularity could lead to further HMRC review, and the debate has also spilled onto social media, with users commenting on the possibility of HMRC taking legal action.

The bigger picture

This debate highlights the complexities of VAT law in an era of innovative food products. As retailers create increasingly creative interpretations of traditional foods, tax authorities must decide where to draw the line between everyday sustenance and luxury treats.

For healthcare organisations like the NHS, which operate cafes and dining facilities, these classifications matter enormously. If the strawberry sandwich trend – or something similar – catches on in hospital cafeterias, the VAT implications could affect food service budgets across the public sector.

What happens next?

M&S has not publicly confirmed VAT treatment for the sandwich, but given the attention this debate is receiving, don’t be surprised if we see another tribunal case in the near future.

Will the strawberry sandwich join the Jaffa Cake in the annals of great British tax debates? Only time (and HMRC) will tell. But one thing’s certain: when it comes to VAT and food, even the sweetest treats can turn sour when the taxman comes calling.