Judges reject HMRC appeal and rule firm’s marshmallows are not sweets

Innovative Bites Ltd wins case brought by UK tax authority after its ‘mega’ product deemed to be an ‘ingredient’

A food company has won a sweet-tasting victory against the UK tax authorities after a court decided that it did not have to pay VAT on its marshmallows because they were not confectionary.

HMRC has unsuccessfully appealed against a 2022 decision by the first tier tribunal (FTT) that Innovative Bites Ltd did not have to pay a £472,928 demand for sales tax on its “Mega Marshmallows” because they were “sold and purchased as a product specifically for roasting”.