Why Jaffa Cakes Avoid VAT: The Biscuit vs Cake Legal Battle
In the UK, VAT is charged on biscuits but not on cakes, which led to a famous legal classification battle over Jaffa Cakes. The distinction was determined by texture: biscuits go soft over time, while cakes go hard. Jaffa Cakes were legally classified as cakes because they harden, allowing them to avoid VAT.
- Biscuits are taxed in the UK; cakes are not.
- Jaffa Cakes were subject to a 'biscuit cake test' based on texture change over time.
- They were ruled as cakes because they go hard, not soft, avoiding VAT.
“They were subject to the biscuit cake test which was the biscuits go soft when left today were still hot what do they do they…”