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Meaning of “partly covered”
Meaning of “partly covered”
Appellant’s submissions
Ms Sloane referred us to google, the Oxford English Dictionary, Oxford Dictionary of English, and the Cambridge Dictionary with a particular focus on the illustrative examples of use provided by those dictionaries. From these sources it was contended that in order to be covered (even partly) the asserted cover must be over the thing being covered, usually for the purpose of protecting or concealing that which is covered.
It was contended that each of the dictionaries connoted a purpose for the cover such that we are entitled to take account of the function performed by that which is said to be the cover.
As to “partly” the Appellant contended that to be partly covered the extent of the cover must be “non-trivial”.
The Appellant challenged the basis on which the Decisions were taken as applying the wrong test. We were referred to the Decisions and the review of those Decisions in which the basis of the decision that the Biscuits are determined as standard rated was explained as follows:
The liability ruling: “the bottom biscuit base upon which the Nutella is dosed and the ‘sealant substance’ is placed is not wholly covered by the top biscuit therefore the ‘sealant substance’ is visible on the surface of the biscuit. As demonstrated by the tribunal case of BN Tartelettes (MAN/02/563) substances that are visible from the external surface of the biscuit effectively become part of the surface of that biscuit. … Bourbon biscuits do not have any amount of chocolate or any similar substance visible on or covering the surface of the biscuit. … as the North Cheshire Foods Ltd tribunal confirmed, the specific size of the chocolate covered area is irrelevant as even a small amount of chocolate on the surface will be considered as partially covering the biscuit.”
The review conclusion letter for the liability ruling: “… it was noted that the top biscuit is smaller than the base biscuit and so causes the sealant substance to be seen and become part of the top layer of the biscuit. … the bottom biscuit base is not wholly covered by the top biscuit, and therefore the sealant substance is visible on the surface of the biscuit effectively becoming part of the top layer. … The product as marketed shows the top biscuit sits inside of the base. The filling/sealant covers the part of the larger bottom biscuits (base) and is also visible in the gap between the small top biscuit and the larger base. … The sealant substance makes up at least [REDACTED] of the product and thus amounts to more than the 1% of the content confirmed in the case of North Cheshire Foods Ltd … The guidance from the North Cheshire Foods Ltd tribunal indicates that the specific size of the chocolate covered area is irrelevant as even the smallest amount of chocolate on the surface can be classed as covering the biscuit. In the case Adams Foods, it was held that the extent to which a biscuit is chocolate covered is immaterial to determine its liability. Notable exceptions to this rule are gingerbread men and like products where the chocolate is insignificant, or the chocolate is embedded in the surface or included in the dough mixture before cooking, or as in a bourbon biscuit where the chocolate or similar product forms a sandwich layer.”
The Appellant contends that the asserted basis for the Decisions cannot be derived from the case law referenced by HMRC and that the issue of visibility of the chocolate or chocolate -like substance is irrelevant when applying the statutory test. The Appellant notes that the chocolate substance is visible in all of the examples in which HMRC accept that the product is not partially covered and thereby zero rated (i.e. gingerbread men with chocolate eyes, bourbon biscuits and chocolate chip cookies).
Concerning the Tribunal’s decision in United Biscuits (UK) Ltd v HMRC [2023] UKFTT 864 (TC) (Blissfuls)which considered “Blissfuls”, the Appellant invited us to conclude that the Tribunal had erred in its application of the statutory test and that we were entitled not to follow the decision on the grounds that it was wrong and/or distinguishable on the facts.