wow, as usual people miss the point. I have no problem with the classification of Jafa Cakes as a cake (just the same as I would assume a “Cadbury’s mini roll” is classified as a cake rather than a chocolate biscuit). The court has decided it IS a cake, so its not really a “loop hole” waiting to be closed. The question is surely why are cakes not subject to VAT – rather than are Jaffa Cakes really cakes?
I have no problem with applying VAT to “sports drinks” either. In fact I couldn’t understand why there were so many ‘unhealthy’ looking sports drinks until the budget announcement explained that a sports drink had no VAT but a general bottled drink did.
I was similarly amazed that rotiseried chicken was not currently classified as hot food takeaway and thus zero rated. Likewise with an anomaly that meant certain food courts could not charge VAT on products which were effectively eaten on the premises.
All seems perfectly reasonable – although its clearly not going to plug the deficit it will at least stop some clever accountants and large businesses from dodging VAT.