TC09095 - [2024] UKFTT 00181 (TC)

The term ‘confectionery’ is not exhaustively defined in the VATA but the legislation specifically includes some items in the term and excludes others from it which gives a flavour of the intended meaning of the word for VAT purposes. As Lord Justice Mummery observed in relation to another food classification issue in HMRC v Proctor & Gamble UK [2009] EWCA Civ 407 (‘Procter & Gamble’), “the VAT legislation uses everyday English words, which ought to be interpreted in a sensible way according to their ordinary and natural meaning”. We respectfully agree. We start by construing the legislation and then consider how courts and tribunals have interpreted that legislation before looking at how confectionery is defined in dictionaries.

In C&E Commrs v Ferrero Ltd [1997] STC 881 (‘Ferrero’), which concerned whether a product was a ‘biscuit’ or ‘confectionery’, Lord Woolf MR said “confectionery would include … both cakes or biscuits but for the express terms to the contrary in item 2” which excluded them from being confectionery (unless the biscuits were wholly or partly covered with chocolate) and restored them to zero rating.

In Premier Foods, the Chancellor held that the VAT Tribunal in that case had misdirected themselves when they concluded that, for an item to be classified as confectionery its production must have involved (a) a process which can be recognised as cooking and (b) the addition to the primary ingredient of an extra element as sweetness. At [17], he held as follows:

“In my judgment, neither of those elements is a necessary condition for a product to be classified as confectionery. I accept the production of confectionery must involve some process applied to the ingredients in their natural state for that is necessarily implicit in the word. I do not consider that such process can only be one capable of being described as cooking. Any process of mixing or compounding is, in principle, sufficient. Similarly, I accept in its ordinary usage, confectionery is limited to products which can be described as sweet but I cannot see why such sweetness may not be inherent in the principal ingredient in its natural state but must be added by some further sweetener with which it is mixed or compounded. So far as I know, a stick of barley sugar does not involve any addition of further sweetness over and above its principal ingredient yet no one would doubt that it should be categorised as confectionery.”

Ms Sloane invited us to consider what is the ordinary and natural meaning of ‘confectionery’ by looking at dictionary definitions. She referred us to HMRC v SSE Generation Ltd [2023] UKSC 17 (‘SSE’) at [42] in which Lord Hamblen referred to a number of dictionary definitions in order to determine the ordinary or common meaning of a word. She submitted that dictionary definitions are an objective yardstick which can be used to ascertain the common or ordinary meaning of ‘confectionery’. She urged us to have regard to the most widespread definition in current UK usage, ie the common ordinary meaning of ‘confectionery’, rather than any single definition or isolated examples. In support of her submission that ‘confectionery’ denotes sweets and chocolates, Ms Sloane listed the following definitions of the word from some of the dictionaries used by Lord Hamblen in SSE:

Lord Hamblen in SSE also cited definitions from the Oxford English Dictionary (‘OED’) and the Shorter Oxford English Dictionary (6^th edn) (‘SOED’). The OED provides the following definition of ‘confectionery’:

“Things made or sold by a confectioner; a collective term for sweetmeats and confections.”

The term ‘sweetmeat’ is described by the OED as a now chiefly archaic collective plural (it has been replaced by ‘sweets’) and defined as:

“Sweet food, as sugared cakes or pastry, confectionary (obsolete); preserved or candied fruits, sugared nuts, etc.; also, globules, lozenges, ‘drops,’ or ‘sticks’ made of sugar with fruit or other flavouring or filling”.

‘Confection’ is principally defined by the OED as:

“Making or preparation by mixture of ingredients; mixing, compounding; composition, preparation, making up, manufacture. Sometimes esp. the making of preserves or confectionery.”

The Collins English Dictionary (14th edn) defines ‘confectionery’ as:

“1 sweets and other confections collectively 2 the art or business of a confectioner”.

It then defines ‘confection’ as:

“1 the act or process of compounding or mixing 2 any sweet preparation of fruit, nuts, etc., such as a preserve or a sweet …”

Chocolates, sweets, biscuits wholly or partly covered with chocolate (or some product similar in taste and appearance to chocolate), drained fruits, glacé fruits and crystallised fruits are all examples of ‘confectionery’ in the legislation. Other prepared foods that are sweet and have the characteristics of ‘confectionery’ are chocolate covered raisins or nuts and sugared nuts. Sweet biscuits (not covered with chocolate) and cakes would also be confectionery if they were not excluded from being confectionery by the legislation (see Ferrero).

Applying the legislation, the guidance in the cases and the dictionary definitions as well as considering the nature of items that are indisputably confectionery, we consider that ‘confectionery’ means items of food that:

Morrisons’ case was that the Products are not ‘confectionery’ according to the ordinary and natural meaning of that term. Ms Sloane for Morrisons submitted that the ordinary and natural meaning of ‘confectionery’, as illustrated by the dictionary definitions, was sweets and chocolates. In considering the different definitions, Ms Sloane urged us not to confuse a ‘sweet snack’ with a ‘sweet’.

Ms Sloane referred us to the Food (Promotion and Placement) (England) Regulations 2021 (the ‘Food Regulations 2021’) which regulate promotions and placement in retail stores of certain foods. The products which are subject to the regulations are foods which are listed in Schedule 1 and are ‘less healthy’ as defined in the regulations and are not ‘charity food sales’. Schedule 1 includes the following categories:

“Category 4: Confectionery including chocolates and sweets.

…

Category 6: Cakes and cupcakes.

Category 7: Sweet biscuits and bars based on one or more of nuts, seeds or cereal.”

Ms Sloane did not contend that Category 4 of Schedule 1 to the Food Regulations 2021 constituted a binding definition of ‘confectionery’ for VAT purposes but said that it confirms the impression that confectionery is a particular subset of sweet products, ie chocolates and sweets.

We did not find the Food Regulations 2021 of any assistance in determining the meaning of ‘confectionery’ in Item 2 of the excepted items to Group 1 of Schedule 8 VATA. The regulations are not concerned with VAT and are drafted quite differently. Note 5 to Group 1 provides an inclusive definition of ‘confectionery’ whereas Schedule 1 to the Food Regulations 2021 contains specific definitions and only food falling within a category can be considered Schedule 1 food (see regulation 2(1)). As Ms Sloane rightly accepted, Category 4 does not limit the meaning of confectionery to ‘chocolates and sweets’. Some of the products in the other categories, namely cakes and sweet biscuits, are accepted as being confectionery for VAT purposes according to the ordinary use of the term (see Ferrero) although they are separately categorised in the Food Regulations 2021. We consider that Category 7 of Schedule 1 is potentially unhelpful to Morrisons’ case as “bars based on one or more of nuts, seeds or cereal” are categorised with sweet biscuits which are confectionery for VAT purposes. The issue in this appeal, however, is not whether the Products are “bars based on one or more of nuts, seeds or cereal” but whether they are ‘confectionery’.

In our view, Premier Foods and Ferrero show that ‘confectionery’ is a broad term that extends beyond traditional sweets and chocolates to encompass cakes and biscuits (which are specifically brought within zero rating by item 2 of the excepted items in Group 1 of Schedule 8). We accept that it is possible that not all processed sweet snack foods are ‘confectionery’ but consider that all confectionery comes within the term ‘sweet snack’. In our view, there is a continuum of sweet snack foods running from items that are undoubtedly ‘confectionery’ at one end of the scale to items that are incontrovertibly not ‘confectionery’ at the other. For example, sweets and chocolates are obviously ‘confectionery’ while raisins and other dried fruits are not ‘confectionery’ notwithstanding that they fulfil a similar function as a sweet snack. In between the extremes, are items which have some of the attributes of ‘confectionery’ but lack others and so the classification is less obvious. However, as Jacob LJ said in Procter & Gamble at [32], “you do not have to know where the precise line is to decide whether something is one side or the other”.

We now turn to consider how we should determine on which side of the line the Products fall.