Anyone who thinks tax isn't entertaining needs to read some tax cases every now and again. Today we have a couple of recent cases about what constitutes a crisp (potato, mostly, it turns out) and how a doll can get more expensive the more human it looks.

A potato crisp by another name?

If you have ever stood in the snack aisle of a supermarket on a Saturday morning wondering about the VAT treatment of a bag of Sensations Poppadoms you were about to purchase, the judgment by the FTT in Walkers Snack Foods Ltd v HMRC [2024] UKFTT 31 (TC) might finally bring you peace. For reasons lost to antiquity, if a snack is similar to a potato crisp then it gets categorised as VATable. The less potato-crispy the snack, the more likely it is to get categorised as zero-rated (and hence more profitable!) generic food.

The assessment took in a whole range of factors such as the ingredients used to make them and how they are marketed. Sadly for lovers of cheap snacks, the FTT found that Sensations Poppadoms are similar to potato crisps and so VAT must be charged on them.  The FTT further noted that just because Sensations Poppadoms are called “poppadoms” this does not influence whether or not they are similar to potato crisps.  In particular, the judgment noted: "the use of the word "poppadom" is something of a red herring (to badly mix foodstuffs). The title given to a foodstuff is not what determines its VAT rating – what matters, in this particular case, is whether it is similar to a potato crisp and is made from potato". And unfortunately for Walkers, it was. 

When is a doll human-like enough to represent a human being?

The judgment in Star-images Enterprises Ltd v Revenue & Customs [2024] UKFTT 50 (TC) demonstrates how, when importing goods into the UK, you need to give careful consideration to how each type of item being imported should be categorised for import duty purposes.  At some level most people realise that different items have different import duties. What most people don't realise is the astonishing number of categories and codes. Thousands upon thousands of them.

Here, the FTT was asked to determine the appropriate commodity code for various figures imported into the UK in 2015 and 2016 (so, while the UK was still a member of the EU). 

The taxpayer tried very hard to argue that some of the figures - despite looking rather human - are in fact not human, on a proper reading of the appropriate fictional lore. We particularly enjoyed the attempt to categorise individuals carrying a pathogen that would turn them into zombies when they die, and Jon Snow from Game of Thrones, as non-human, the latter on account of him having died and been resurrected.  The FTT did not play ball however and took “no account of the ‘non-human’ qualities in the character's ‘backstory’" and focused instead on “the objective characteristics and properties of the items and their presentation”.  When applied to figures imported into the UK which represented characters from The Wizard of Oz, this approach resulted (perhaps surprisingly) in the FTT finding that the Tin-Man figure should be classified as a non-human toy (with an import duty rate of 0%) but that the Lion figure was a doll representing a human being (with an import duty rate of 4.7%).

This case highlights how when importing items into GB, it is worth importers considering whether or not to obtain an Advanced Tariff Ruling (in particular, where their customs classification is not clear-cut).  Assuming full disclosure is made to HMRC by the importer in respect of the items in question when submitting an application for an Advanced Tariff Ruling, the ruling received from HMRC would at least give importers comfort on the commodity code to use for specific items. In other words: make sure you don't get into arguments over tin men and cowardly lions (although we have a sneaking suspicion that the advisers on this one had a lot of fun dreaming up ways in which the figurines could be non-human).