Pringles ruling means they're VAT-free
Friday 04 July 2008
A Pringle is undoubtedly crisp - but it is not a potato crisp. That was the conclusion reached by a High Court judge today after an exhaustive inquiry into the ingredients, manufacturer and packaging of the top-selling snack.
The result of Mr Justice Warren's ruling is that regular Pringles, in their various flavours, are free from VAT.
The judge allowed an appeal by manufacturers Proctor & Gamble against a VAT Tribunal decision that Pringles should be standard-rated at 17.5 per cent as falling within the definition "potato crisps, potato sticks, potato puffs and similar products made from the potato, or from potato flour, or from potato starch".
Proctor & Gamble stands to save millions of pounds on UK sales of Pringles. Worldwide sales of the snack, in its distinctive tube packaging, are reckoned to reach £500 million.
Most foodstuffs are zero-rated for VAT, but Revenue and Customs argued that Pringles fell within the "potato crisp" exception.
Procter & Gamble pointed out that, unlike potato crisps, Pringles had a regular shape "not found in nature" as well as a uniform colouring and texture and a "mouth melt" taste.
Crisps did not contain non-potato flours like Pringles and were not normally packaged in tubes.
And customers did not regard Pringles as potato crisps.
Mr Justice Warren ruled that Pringles were not "made from the potato" within the definition laid down by the 1994 VAT Act.
To fall within the exception, a product "must be wholly, or substantially wholly, made from the potato".
Pringles, he said, were made from potato flour, corn flour, wheat starch and rice flour together with fat and emulsifier, salt and seasoning, with a potato content of around 42 per cent.
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