Jaffa cakes are God’s own snacks and I will brook no opposition. I don’t mind if they’re McVitie’s brand Jaffa cakes, or Pim’s, the suspicious European variety. Even Sainsbury’s Basics Jaffa cakes float my balloon. Take a soft sponge base, slap some jam and chocolate on that puppy, and you’re golden.

But if you describe your love of these glorious creations, the conversation takes a familiar turn. Are they cakes or are they biscuits? it goes. HMRC tried to classify them as cakes – or was it biscuits? Something like that. It had to do with VAT…

The drama began in 1991, when a Customs and Excise review ended the 28-year classification of Jaffa cakes as cakes and shunted them into a bizarre netherworld of VAT classification. There are three VAT rates: standard, reduced, and zero. Zero-rating is felt to apply to ‘essentials’, mainly: most food, medicine, mass transit, and books, but also live fish, bicycle helmets, and aircraft. If it’s an extravagance, it’s standard-rated; for example, electronics, taxi fares, fruit juice, petrol, confectionery, waste oil (if not for cooking or animal feed), eat-in food, MSG, and salt for dishwashers and roads.

Cakes and biscuits are both thought to be essential food and so they are zero-rated, i.e., VAT is not assessed. But biscuits wholly or partly covered in chocolate, even “nine or ten fine lines of chocolate, amounting to about 1% of their content” are found to be confectionery and the standard rate of tax (20%) is assessed.

United Biscuits contested the classification of Jaffa cakes as biscuits partly covered in chocolate. Relying on a “useful, if technical” table of the differences between cakes and biscuits presented by an expert witness in an earlier case (Chocolate Dundees, which are chocolate-covered shortcakes, are biscuits and thus confectionery for VAT purposes), the tribunal rendered its decision.

The tribunal first noted that Jaffa cakes were made of a thin, aerated batter of eggs, flour, and sugar, like a traditional sponge cake. Jaffa cakes also cannot be snapped (as one would expect of a biscuit), and left out, they go stale, like a cake. On the other hand, the product can be eaten in a few mouthfuls without a fork, like a sweet, and their packaging and marketing is like a biscuit’s. The name itself, they reasoned, bore only minor weight.

Out of this mess of contradictory ideas, the tribunal assessed that the Jaffa cake has both cake and biscuit characteristics. They decided that there were enough cake characteristics that they could justify zero-rating without classifying the food definitively.

The next time you face this stale conversation, the correct answer to the cake-or-biscuit question is “yes”: HMRC thinks they’re both cake-like and biscuity. Here, as in life, nuance may be the hardest thing to swallow.

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