A British court has clarified the legal status of Pringles, which are sometimes regarded as being food items, and sometimes used in scientific investigations (one of which led to the awarding of an Ig Nobel Prize in 2008). Tax-News.com reports on May 26, 2009::
HM Revenue and Customs has won a legal battle with Proctor and Gamble over the liability for value-added tax (VAT) purposes of its ‘Pringles’ potato chips.
The Court of Appeal has ruled that Pringles are, in fact, a potato-based snack despite the fact that they are only 42% potato, and are therefore liable for VAT at the standard rate, currently 15%.
Procter and Gamble had attempted to prove in a long-standing battle that their crisps should be allowed VAT-exemption – due to the fact that they are really more dough than potato.
The argument was based around the fact that Pringles had been placed within the category of “potato crisps, potato sticks, potato puffs and similar products made from the potato, or from potato flour, or from potato starch,” by a VAT and Duties Tribunal in 2007.
This ruling was overturned by the High Court last year when the presiding judge, Mr Justice Warren, argued that to attract VAT the product must be wholly, or substantially wholly, made from potato. However, ruling in the Court of Appeal, Lord Justice Jacob upheld the Tribunal’s decision, stating that there “is more than enough potato content” in Pringles “for it to be a reasonable view that it is made from potato.”