The Upper Tax Tribunal has thrown out an appeal by the crunchy potato slices giant regarding its value-added tax (VAT) dispute with the taxman.
Walkers Snack Foods, the subsidiary of US food giant PepsiCo, claims its ‘Sensations Poppadoms’ fell within group one of the VAT definitions, which means they should be treated as zero-rated.
However, HMRC disagreed, arguing that because the products are made from potatoes and packaged for human consumption, they should be treated as standard-rated for VAT purposes.
The case first went to the First-Tier Tribunal.
Judge Anne Fairpo examined two flavours, Lime and Coriander Chutney and Mango and Red Chilli Chutney, and found they contain 17.5-18 per cent potato granules, 17.5-18 per cent potato starch, and approximately 4.25 per cent modified potato starch.
Walkers argued that its Sensations Poppadoms were designed to complement Indian meals and that potato crisps are unlikely to be dipped or eaten as an accompaniment to a meal.
Judge Fairpo ruled in January 2024 that Walker’s Sensations Poppadoms ‘are similar to potato crisps’ and, therefore, are not eligible for the zero-rated VAT.
The crisps giants sought to appeal this decision to the Upper Tax Tribunal; however, the two judges dismissed the appeal on Friday.
Robin Prince, VAT partner at MHA, explained: “Although the appeal was dismissed, the Upper Tribunal did express reservations about the First Tier Tribunal not affording any weight to the name of the product, recalling the First Tier Tribunal’s observations that ‘calling a snack food ‘Hula Hoops’ does not mean that one could twirl that product around one’s midriff, nor is ‘Monster Munch’ generally reserved as a food for monsters”.
“However, unfortunately for Walkers, this was not enough for them to conclude that the First Tier Tribunal had reached an unreasonable decision,” he added.
