“It is highly dangerous, if not impossible, to attempt to place an accurate definition upon a word in common use; you can look up examples of its many uses if you want to in the Oxford Dictionary but that does not help on definition; in fact it probably only shows that the word normally defies definition. The task of the court in construing statutory language such as that which is before your Lordships is to look at the mischief at which the Act is directed and then, in that light, to consider whether as a matter of common sense and every day usage the known, proved or admitted or properly inferred facts of the particular case bring the case within the ordinary meaning of the words used by Parliament.” 147. The “mischief” at which Note 5 was directed can be seen from the Chancellor’s Budget speech, recorded in Hansard, and from the explanatory Note to the relevant Order changing the primary legislation. Neither Hansard nor the Order was referred to by either party, but both are set out in the Organix case which formed a key part of both parties’ submissions. 148. I therefore considered whether Hansard and/or the explanatory Note should to be taken into account in determining the meaning of the statutory term at issue in this case, namely “sweetened”
“The emergence of new products has rendered this definition…somewhat obsolete. In particular, recent legal decisions mean that some cereal bars are subject to VAT, while others are not. I propose to clarify the law so that all cereal bars are taxed.” 151.The Value Added Tax (Confectionery) Order 1988 came into force on1 May 1988 . It rewrote excepted Item 2 so that it read (as it does now): “Confectionery, not including cakes or biscuits other than biscuits wholly or partly covered with chocolate or with some product similar in taste and appearance” 152. The Order also added Note 5, which read, again as it does now: “…for the purposes of item 2 of the excepted items ‘confectionery’ includes chocolates, sweets and biscuits; drained, glacé or crystallised fruits; and any item of sweetened prepared food which is normally eaten with the fingers.” 153. The Explanatory Note following the Order read: “This Order amends Group 1 of Schedule 5 to theValue Added Tax Act 1983 in relation to confectionery. It removes certain uncertainties and, while maintaining relief for cakes, restricts the scope of the relief for other confectionery products which are not wholly or partly covered with chocolate or with some product similar in taste and appearance. The main immediate effect will be to tax all cereal bars at the standard rate.” 154. As is well known, reference can be made to Hansard if the requirements set out by Lord Browne-Wilkinson in Pepper v Hart[1993] AC 593 at p.634 are met. He said: ''In my judgment, subject to the questions of the privileges of the House of Commons, reference to Parliamentary material should be permitted as an aid to the construction of legislation which is ambiguous or obscure or the literal meaning of which leads to an absurdity.' 155. As the meaning of “sweetened” in the relevant amending provision is neither ambiguous or obscure, the Pepper v Hart principle does not apply. 156. It is also well-known that Lord Steyn said in R (Westminster City Council) v National Asylum Support Service[2002] UKHL 38 (“ NASS ”) that Explanatory Notes were “always admissible aids to construction” in so far as they “cast light on the objective setting or contextual scene of the statute, and the mischief at which it is aimed”
“The starting point is that language in all legal texts conveys meaning according to the circumstances in which it was used. It follows that the context must always be identified and considered before the process of construction or during it. It is therefore wrong to say that the court may only resort to evidence of the contextual scene when an ambiguity has arisen.” 158. In accordance with that guidance, having considered both Hansard and the Explanatory Note at the end of the amending Order, I find that by the words “confectionery includes…any item of sweetened prepared food which is normally eaten with the fingers”, Parliament intended that all cereal bars would be taxed at the standard rate. The “mischief” at which the change was aimed was that the previous wording allowed some cereal bars to be zero rated. 159. However, I must also take into account the warning which Lord Steyn gives, at [6] of the same judgment: “What is impermissible is to treat the wishes and desires of the Government about the scope of the statutory language as reflecting the will of Parliament. The aims of the Government in respect of the meaning of clauses as revealed in Explanatory Notes cannot be attributed to Parliament. The object is to see what is the intention expressed by the words enacted.” 160. These passages from NASS were discussed and considered by Brookes LJ in Flora v Wakom[2006] EWCA Civ 1103 , where he said at [17]: “If, however, it is impossible to treat the wishes and desires of the Government about the scope of the statutory language as reflecting the will of Parliament, it is in my judgment equally impossible to treat the Government's expectations as reflecting the will of Parliament. We are all too familiar with statutes having a contrary result to that which the Government expected through no fault of the courts which interpreted them.” 161. The application of that principle can be seen in R v Najib[2018] EWCA Crim 909 , the Court of Appeal (Leggatt LJ, McGowan J, Sir Peter Openshaw) who were considering an entirely different issue: the scope of food safety regulations. Those regulations referred only to cattle, but the explanatory note included sheep. The judgment of the Court was handed down by Leggatt LJ, who said at [30] that the explanatory note: “…cannot be used to read into paragraph 14 a provision which is not actually to be found there…It seems likely that the failure to include in the Regulations any provision which imposes such an obligation [in relation to sheep] is an oversight on the part of the Secretary of State. But only the legislature has the power to repair that omission. It is not permissible for courts to fill gaps in legislation by creating obligations which do not otherwise exist.” 162. The same is true in this case. Parliament clearly wanted to change the law so that “all cereal bars are taxed”, but the amending provision not only failed to include the words “cereal bars”, but by including the word “sweetened” limited its application to products where sweetening had been added. As with the food safety regulations considered in Najib, only Parliament has the power to repair that mistake. Conclusion 163. Although Parliament’s intention when introducing Note 5 was that all cereal bars would be taxed at the standard rate, the wording of that Note does not produce that result. Instead, the only cereal bars which fall within that Note are those which have been “sweetened” by the addition of sugar or another sweet substance so as to impart a sweet flavour. Cereal bars such as those produced by Organix, where the core ingredients are themselves sweet, are outside Note 5. Same treatment when separate products combined? 164. One of Mr Simpson’s submissions was that a product made of zero-rated foodstuffs pressed together should be zero-rated. I reject that submission. The VAT status of an item of food is determined not by its ingredients, but by the nature of the supply. Section 1 of VATA provides that “Value added tax shall be charged, in accordance with the provisions of this Act, on the supply of goods and services in the United Kingdom”
“On that basis, the tribunal finds as fact that none of the bars are ‘items of sweetened prepared food which is normally eaten with the fingers’ within the definition in note (5) to excepted item 2 of Group 1 of Schedule 8 to the VATA. The appeal is therefore allowed.” 168. The ratio of the Tribunal’s judgment is therefore that the bars were not confectionery because they did not satisfy Note 5. It is clear from the later judgment of the Chancellor in Premier that this is not the end of the matter: it is instead, necessary to go on and consider whether a product is confectionery within the normal meaning of the term, applying a multi-factorial test. 169. I accept that, had the Tribunal in the Organix case carried out such an exercise, it is likely they would have come to the same conclusion, because they had found as a fact that the products were not sweet, and we know from Premier that sweetness is necessary for a product to be confectionery. Nevertheless, the ratio of the case no longer holds good. The meaning of confectionery 170. The word “confectionery” is not defined in the legislation. Mr Simpson submitted that the Organix Bars did not fall “within the reasonable ambit of [confectionery] as a matter of ordinary language”, but did not put forward a definition. Mr Watkinson said that there was no need for me to define the term in order to decide the appeal. I am also mindful that Jacob LJ said in Proctor & Gamble that “you do not have to know where the precise line is to decide whether something is one side or the other”
“[9] It is difficult to detect any policy behind these detailed exceptions and overrides. Mr Thomas (who appears for Kalron) claims to identify a policy which is to exclude what he calls junk food… [10] It is impossible, in my judgment, to spell out of the structure and content of Group 1 a policy such as Mr Thomas submits can be detected. There are plenty of ‘junk’ foods which do not fall within the exceptions; and there are healthy drinks which are within the exception, for instance, freshly squeezed orange juice.” 175. I respectfully agree. I also agree with the FTT in Corte Diletto when they said at [100]: “The healthiness or otherwise of a product has no bearing on its VAT classification. Zero-rating depends solely on whether a product has sufficient characteristics to fall within one of the Groups in schedule 8 when applying the [statutory] tests…The most sugary, cream filled, chocolate covered cake will still be zero rated. The healthiest of low sugar, low fat confectionery will still be standard rated.” 176. I therefore agree with Mr Watkinson that whether or not a product is healthy rather than “junk” food is irrelevant when carrying out the multi-factorial test necessary to decide a product’s VAT status, and I have not taken it into account below. W hether the Organix Bars are confectionery: the multi-factorial test 177. In deciding ether the Organix Bars are confectionery, I take into account the following: (1) Sugar content: The Banana bar is 27% sugar and the Carrot Cake bar is 26% sugar. Although this is around half the sugar content of most of the confectionery provided by way of comparison, it is nevertheless more than 25% of the bars by weight. (2) Sweet to taste: Both bars were sweet, although the Carrot Cake bar was less sweet than the Banana bar. (3) Subjected to a process: The ingredients are mixed together; “sheeted out”; cut into oblong bars, baked, cooled and packed, and so are clearly subjected to a process. (4) Normally eaten with the fingers: The Appellant accepted t this was the case. (5) Held out to be eaten as a snack: I find as a fact that the Organix Bars are held out for sale as snacks because: (a) they are positioned in the baby dry food snacking area of stores; (b) when Morrison’s sell the Bars online, they are categorised under “snacks” for babies and toddlers; (c) the Morrison’s website describes them as “ideal toddler snack bars”; (d) the bars won an award for being the Best Toddler Snack; (e) Mr Marshall accepted in correspondence with HMRC that “the Organix Bars are held out for sale [by Morrison’s] as healthy snacks”; and (f) customers expect to find Organix Bars with toddler foods and snacks. (6) When consumed: Mr Watkinson submitted that the Organix Bars were “ are to be consumed in circumstances similar to those in which confectionery is consumed”
“The issue is not whether Torq Bars can be categorised as flapjacks but as cake. Flapjacks (or certain ‘traditional’ flapjacks) may be sufficiently close in characteristics to cake to allow flapjacks to be categorised as cake. The fact that another product – in this case Torq Bars - is sufficiently similar in character to flapjacks to allow it to be categorised with flapjacks (if there were such a category) does not mean that it can be categorised as cake. The question always is whether Torq Bars have sufficient affinities with cake to be categorised as cake.” 181. In Bells of Lazonby, which considered the classification of a fruit, nut and seed bar, the Tribunal held at [13]: “…if we are right in our view that the word ‘cake’ is intended to bear its ordinary meaning in the context in which it used, we should ask ourselves whether an ordinary person, aware of that context, would consider the Appellant's product to be a cake: that was the approach endorsed by the Court of Appeal in Ferrero . We do not think such a person would limit the term to what might be regarded as a conventional, or traditional, cake such as the sponge or fruit cake mentioned in the Public Notice, but even adopting a fairly liberal interpretation we doubt if he would class this product as a cake. We share the Commissioners' evident view that flapjacks (that is, a product, in its most familiar form, usually composed of oats held together by fat and syrup) are, at best, at the borderline; they may be eaten instead of cake, and at the same time of day, but in our view it is unlikely that an ordinary person would consider that a flapjack was merely a variety of cake—he would, we think, consider it a distinct, even if in some respects similar, product.” 182. I agree with the judgments of both the above Tribunals. The question I have to decide is whether the Organix Bars are cakes, not whether they are flapjacks, and for the reasons set out at §180, they are not cakes. For completeness I also share the view of the Tribunal in Bells of Lazonby that the ordinary person would not classify a flapjack as a cake, but instead as a distinct but similar product. Overall conclusion 183. I decide, for the reasons set out above, that the Organix Bars are confectionery and are not cakes. THE NAKD BARS 184. As with the Organix Bars, I first set out my findings of fact, followed by the parties’ submissions and my analysis and conclusions. Finding of fact 185. The findings are divided into ingredients and processing; packaging; positioning; marketing; taste and texture, and purchasers. The ingredients and processing 186. There are three types of Nakd Bars: Fruit and Nut bars, Oaties and Crunchies: (1) the Fruit and Nut bars in issue are: Bakewell Tart; Berry Delight; Blueberry Muffin; Cashew Cookie; Cocoa Delight; Cocoa Orange; Ginger Bread; Lemon Drizzle; Peanut Delight, and Rhubarb and Custard; (2) the Oaties in issue are: Apple Pie; Banana Bread; Berry Bliss; Berry Cheeky; Cocoa Loco and Cocoa Twist; and (3) the Crunchies in issue are: Banana Crunch and Strawberry Crunch. 187. The main ingredient in all Nakd Bars is dates, at between 37% and 58%. All Fruit & Nut bars contain significant percentages of nuts and/or dried fruit, with the type of nut and/or fruit varying depending on the bar. For example, Blueberry Muffin contains cashews (15%); raisins (15%); almonds (10%) and blueberries (2%). All contain “natural flavourings”, and some also have additional flavouring, such as cocoa, ginger or lemon. 188. In the Oaties, the second main ingredient after dates is oats, at between 20% and 25%. All Oaties contain raisins (ranging from 13% to 21%), plus one or more types of nuts (ranging from 8% to 13%). Two Oaties contain apple juice concentrate at 8% and 9%; another two contain “apple and carob extract” also at 8%, and the remaining two contain fruit extract (4% and 5%). The Banana bar is 25% banana, and the other Oaties contain small quantities of various different additional ingredients, plus in each case “natural flavourings”. 189. Of the two Crunch bars, Banana Crunch contains soya protein crunchies (18%); cashews (15%); raisins (15%); dried banana (6%); apple juice concentrate (2%) and banana flavouring. Strawberry Crunch is similar but with strawberry replacing the banana. 190. The sugar content by weight of the Nakd Bars ranges from 33% for Ginger Bread through to 52% for Blueberry Muffin, Berry Delight and Rhubarb and Custard. The sugar content of all Nakd Bars is thus between one-third and half of their total weight. By way of comparison, KitKats are 51% sugar; Maltesers are 51.7% sugar and Mars bars are 59.9% sugar, while Green & Black’s organic dark chocolate contains 28.5% sugar. In some Nakd Bars the sugar content is thus similar to that of other well-known confectionery brands, and even the Bars with the lowest percentage contain more sugar than Green & Black’s. 191. The above ingredients are not baked but mixed or (as the packaging tells us) “swooshed” together, and then cut into rectangular bar shapes. Packaging 192. The findings in this part of the decision are based on the evidence provided for the Fruit & Nut bars and the Oaties. I can make no findings about the packaging for the Crunch bars, as no samples were provided; neither were there any pictures of the boxes or wrapping. There was also no sample evidence for three of the Oaties (Berry Cheeky, Cocoa Loco and Apple Pie) and the only evidence for Rhubarb and Custard was the picture of the front of the box. However, packaging for other Oaties and Fruit & Nut bars was supplied, and I have assumed that the findings below about the Fruit & Nut and the Oaties apply to all the products of that type which are under appeal. 193. The Fruit and Nut and Oaties are sold both singly and in boxes of four. The main part of the front of each bar has the name “Nakd” in large letters, followed by the product’s name. To the left, in slightly smaller letters, are the words “gluten, wheat and dairy FREE”
“the collision of sweet zesty orange and rich cocoa makes for an incredible and indulgent taste…a yummy combination of fruit and nuts, gently smoothed together into a handy bar shaped snack”
“a snack that is simple and wholesome…stock up on these yummy bars today” and “the ultimate healthy cookie snack you can eat anytime any where”. (3) Bakewell Tart : “a healthy on the go snack bar”. (4) Blueberry Muffin : “the perfect treat to indulge in when you’re looking for something a little sweet and easy to eat, not to mention super healthy as it counts as one of your five a day”. (5) Berry Delight : “Give them a try next time you are looking for something to pop in your lunchbox”; “for grabbing on the run” and “super healthy snacks for people who get peckish between meals” 198. Extracts from the Morrison’s website included the following comments: (1) Cocoa Orange : “the perfect alterative to chocolate”. (2) Banana Bread : “bursting with awesome oats that will keep you going from breakfast to snack time…we want everyone to have the best start to their day”. (3) Berry Bliss : “all that scrummy goodness in only 99 calories”
“this more than satisfies my chocolate cravings. It’s so much healthier than my normal chocolate bar (and much more filling) but still so chocolatey and yummy and makes a perfect treat!!” and “I think they will make a pleasant change from the chocolate and sugar bars you usually end up with if you are in a ‘snack-grabbing’ mood”. (2) Cocoa Delight : “they are soft, sweet, but not overly sweet, and they leave this deep chocolate aftertaste in your mouth”. (3) Carrot Cake : “Nakd bars are perfect between breakfast and lunch with a cup of tea”. (4) Nakd Berry : “perfect for those moments when you want something sweet but healthy…I don’t always want to snack on unhealthy foods”. (5) Bakewell Tart : “tastes just like the real thing…definitely recommended for the sweet-toothed out there”. 202. Mr Galbraith’s evidence related to both the Organix Bars and the Nakd Bars and has been considered earlier in this decision. I accept on the basis of the packaging and the marketing that the purchasers of Nakd Bars are health-conscious , and that inference is confirmed by Mr Galbraith’s research. I make no further findings from that evidence. Mr Simpson’s submissions about the Nakd Bars 203. Mr Simpson’s submissions about Nakd Bars overlapped with those he had made about the Organix Bars, and where this was the case, they are set out in the preceding part of this decision. His additional submissions were as follows: (1) Nakd Bars are intrinsically sweet as the result of the ingredients, in particular the dates ; the other ingredients served to reduce the sweetness when compared to eating dates on their own . (2) The focus of the packaging is on health benefits and minimal processing, and this supports classification as general foods rather than as confectionery. (3) Nakd Bars are not placed in the confectionery section of Morrison’s. (4) Many of the product names ̶ Berry Delight, Cashew Cookie, Cocoa Orange, Cocoa Delight, Peanut Delight, Berry Bliss, Berry Cheeky, Cocoa Loco, and Cocoa Twist ̶ refer to a key ingredient as being fruit or nuts, and this pointed slightly towards classification as general foods. The name “Rhubarb and Custard” also referred to a general food. (5) Other product names refer to cakes ̶ Bakewell Tart, Blueberry Muffin, Ginger Bread, Lemon Drizzle, and Apple Pie, and were “intended to be healthy replacements for the relevant types of cake”
“on the go”, “with a cuppa” and “just in case. In addition, the Nakd website says that the Bars can be eaten “anytime any where” and are “for people who get peckish between meals”
“indulgent taste”; “the perfect treat to indulge in” and “all that scrummy goodness”