Teacake error costs taxman £3.5 million - victory for Marks and Spencer
Published Date:
10 April 2008
The humble chocolate teacake cost the Treasury £3.5 million today.
That's the price of a VAT mistake which classified Marks & Spencer teacakes as chocolate biscuits.
Twenty years later HM Customs and Excise acknowledged the error and said teacakes are chocolate cakes after all - a crucial distinction because chocolate biscuits are subject to standard-rate VAT and chocolate cakes are zero-rated.
But by the time the error was corrected Marks & Spencer had handed over £3.5m in wrongly paid VAT on its teacake sales, and demanded the money back.
Today the European Court of Justice agreed that a teacake is not a biscuit and confirmed that the Treasury should reimburse the retailer.
The 12-year legal battle began when the Commissioners of Customs and Excise acknowledged the error - but only offered £350,000 back on the grounds that 90% of the VAT had been passed on to Marks & Spencer customers: paying back the total sum would therefore mean "unjust enrichment" for the store.
The full article contains 176 words and appears in n/a newspaper.
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Last Updated:
10 April 2008 4:23 PM
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Source:
n/a
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Location:
Halifax
