Jaffa Cakes are Cakes - Not Biscuits

by Shapol Mohamed

What is the best thing to gorge on? 

Jaffa cake is the only correct answer and I will brook no opposition. 

I don’t mind if they’re McVitie’s brand Jaffa cakes, or Pim’s, the suspicious European variety. Even Tescos’s Value Jaffa cakes float my balloon. Take a soft sponge biscuit, slap some jam and chocolate on that puppy, and you’re golden.

But if you describe your love for these glorious creations, the conversation can take a controversial turn. Are they cakes or are they biscuits? it goes. HMRC tried to classify them as cakes – or was it biscuits? Something like that. It had to do with VAT…

The drama began in 1991 when a Customs and Excise review ended the 28-year classification of Jaffa cakes as cakes and shunted them into a bizarre netherworld of VAT classification.

But first, let me give you a quick crash course on VAT that won’t take a jiffy (cool fact Jiffy is an actual measurement of time. Defined as the time it takes for light to travel one centimeter in a vacuum.) There are three VAT rates: standard, reduced, and zero. Zero-rating is felt to apply to ‘essentials’, such as most foods, medicines, public transport, and books, but also live fish, bicycle helmets, and it used to cover aircraft's too (this got Lewis Hamilton into trouble.) If it’s not a necessity or if it is a luxury item, it’s standard-rated; for example, electronics, taxi fares, fruit juice, petrol, confectionery, waste oil (if not for cooking or animal feed), eat-in food, and salt for dishwashers and roads.

Now back to Jaffa Cakes. Cakes and biscuits are both thought to be essential food and so they are zero-rated, i.e., VAT is not assessed. But biscuits wholly or partly covered in chocolate, even nine or ten fine lines of chocolate, amounting to about 1% of their content are found to be confectionery and the standard rate of tax (20%) is assessed.

Thankfully, United Biscuits contested the classification of Jaffa cakes as biscuits partly covered in chocolate. Our saviour, United Biscuits, taught a good lesson to HMRC and made sure they knew how to tell the difference between cakes and biscuits.

They stated that Jaffa cakes were made of a thin, aerated batter of eggs, flour, and sugar, like a traditional sponge cake. However, they snapped back at humanities liberators that Jaffa cakes can be eaten in a few mouthfuls without a fork, like a sweet, and their packaging and marketing is like a biscuit’s. Not to be outsmarted, United Biscuits (now united with 60 million people), said Jaffa cakes cannot be snapped (as one would expect of a biscuit), and left out, they go stale, like a cake. Besides, it had CAKE in its name! In the end, as if it was a Disney movie, there was a happy ending. HMRC agreed that it had enough cake characteristics that qualified it to be VAT-free.

The next time you face this stale conversation, the correct answer to the cake-or-biscuit question is “cake” and if anyone disagrees tell them as bluntly as possible that they are wrong. They must agree, even if they find that hard to swallow.