VAT liability of Pringles
HMRC have issued a Revenue & Customs Brief concerning the VAT liability of ‘Pringles’ – a savoury snack food product. This follows a recent Court of Appeal decision which confirmed HMRC’s contention that the product Pringles – a savoury snack, is standard rated for VAT.
Proctor & Gamble, the manufacturers of Pringles, argued that this should be zero-rated for VAT on the basis that the product was dissimilar to a crisp and not wholly or mainly made from potato. In a long running case, which saw HMRC win at Tribunal, lose at the High Court and subsequently win their appeal to the Court of Appeal, Pringles have been confirmed as standard-rated for VAT.
This judgement will affect any business that relied on the earlier High Court decision and treated regular ‘Pringles’ as zero-rated. Businesses must now charge VAT on all sales of ‘Pringles’. In addition VAT must also be accounted for on any sales which were mistakenly zero-rated.
This can be done by way of an adjustment to a current VAT return where the value of the adjustment is less than £10,000 or 1% of the box 6 figure on the VAT return (subject to a cap of £50,000). In all other cases a disclosure must be sent to HMRC detailing the error.
Other businesses which had submitted claims to HMRC in light of the High Court case but who had continued to correctly account for VAT will now have these claims rejected.