A tasty piece of thinking puts potato snack in its place
The potato has not before played a significant role in the jurisprudence of this country. There is a statutory definition, in the Potatoes Originating in Egypt Regulations 1998. But the “tuber or true seed of Solanum tuberosum L or other tuber-forming species or hybrid of the genus Solanum L” has not been on the menu for our appellate courts. Until, that is, the entertaining judgment last month by the Court of Appeal in Commissioners for Her Majesty’s Revenue & Customs v Procter & Gamble UK.
The Value Added Tax Act 1994 zero-rates food products. But there are exceptions, the supply of which attracts standard-rate VAT. One of those exceptions is stated to be “any of the following when packaged for human consumption without further preparation, namely potato crisps, potato sticks, potato puffs and similar products made from the potato, or from potato flour, or from potato starch…”. The tasty legal question for the Court of Appeal was whether the snack product Pringles is similar to a crisp and made from the potato and therefore subject to standard-rate VAT. If so, then Procter & Gamble’s profits will be chipped away by having to pay £100 million in back tax and another £20 million a year for the future.
Lord Justice Jacob, for the Court of Appeal, rejected the submission of Roderick Cordara, QC, for Procter & Gamble, that Pringles do not have a sufficient content of potato to give the product “a quality of what he called ‘potato-ness’”. The judge was satisfied that Parliament had not intended such an “Aristotelian question” to be asked and answered. The issue of classification should not be given an “over-elaborate, almost mind-numbing legal analysis”. He concluded that it was a matter for the VAT Tribunal to consider and decide whether a product 42 per cent of which consists of potato flour satisfies the statutory criterion. The VAT Tribunal found that it did, and there was no basis on which the Court of Appeal could or should interfere with that decision.
Lord Justice Mummery, agreeing, noted the “urbane” submissions of Cordara, which referred to “the potato as a fiscal contaminant” and drew attention to the “essential characteristics of the paradigm potato crisp”. The judge rejected the argument that Pringles also have 33 per cent fat, and if a product has a number of significant ingredients it cannot be said to be “made from” one of them. Lord Justice Mummery pointed out that “most children, if asked whether jellies with raspberries in them were ‘made from’ jelly, would have the good sense to say ‘Yes’, despite the raspberries”.
Legal decisions on food inevitably depend on the context. In 1894 Mr Justice Hawkins decided that mustard, pepper and baking powder are “food” for the purposes of the Sale of Food and Drugs Act 1875 although “nobody would ordinarily dream of eating them alone”. In the context of value-added tax, the VAT Tribunal has had an appetising diet of food cases, as De Voil Indirect Tax Service confirms.
In 2005 the tribunal concluded that hula hoops were standard-rated even though supplied with sachets of barbecue sauce. The tribunal was satisfied that the product was ready to eat without the sauce, and the fact that the consumer had the choice of seasoning did not amount to “further preparation” for the purposes of the statutory test.
The VAT Act specifies that zero-rating applies to cakes and to biscuits not wholly or partly covered with chocolate. In 1991 the tribunal held, no doubt after careful consideration of the evidence, that a Jaffa Cake is not a biscuit but a cake and so is zero-rated. That was because the sponge cake element is not merely a base for the jam and chocolate, but provides the bulk and texture of the product. In a 1997 judgment in the Court of Appeal, Lord Woolf helpfully explained that if a product “has more characteristics of a cake, it is characterised as a cake. If it has more characteristics of a biscuit, it is characterised as a biscuit.”
The humble potato has had its moments in cultural history: Van Gogh’s 1885 painting The Potato Eaters; Ira Gershwin’s 1936 lyric, “You like potato and I like po-tah-to”; and the Cadbury’s Smash television advertisements in the 1970s (“For mash get Smash”). It has had political importance from the Irish potato famine of the mid-19th century to the embarrassing inability of the American Vice-President Dan Quayle to spell “potato” at an elementary school in Trenton, New Jersey, in 1992. The Court of Appeal judgment on Pringles now accords the potato the distinction of being the subject of a judgment that will be read and admired as a fine example of legal reasoning and legal literature. And that is not small potatoes.
The author is a practising barrister at Blackstone Chambers, a Fellow of All Souls College, Oxford, and a crossbench peer in the House of Lords.