In WM Morrison Supermarkets Plc v HMRC [2021] TC08087, the First Tier Tribunal (FTT) found that both Morrison Organix and Nakd bars bars were confectionery and not cakes for VAT purposes. Consequently, they were standard rated and not zero-rated.

  • In 2017/18, Morrison claimed that output tax of £1,000,163.69 had been overpaid on 18 types of the ‘Nakd’ bars during VAT periods October 2014 to July 2018. They had been wrongly standard rated instead of being zero-rated.
  • Morrison also brought the claim in relation to ‘Organix’ bars, claiming they had overpaid £97,162.80 in VAT regarding their 'child-friendly' snacks.

HMRC decided the bars were standard-rated as confectionery, falling into the List of excepted items that were not zero-rated as foods and refused the claim for repayment.  

Morrison argued that the bars, which come in a number of fruit and nut mixes including muffins, lemon drizzle and banana bread, are not confectionery, or alternatively should be zero-rated as cakes.

On 7 December 2018, Morrison appealed that decision to the FTT.

The FTT made findings, divided into ingredients and process; marketing; packaging; taste and texture and purchasers.

In terms of ingredients:

  • The Organix (a snack bar for Toddlers) had a content that was 26-27% sugar.
  • The Nak'd bar, (aimed at grown-ups) has a sugar content ranging from 33% to 52%. By way of comparison, KitKats are 51% sugar; Maltesers are 51.7% sugar and Mars bars are 59.9% sugar, while Green & Black’s organic dark chocolate contains 28.5% sugar.

Both bars ingredients were mixed and then rolled out to form bars. 

None of the different types of bar on the test shared ingredients with the majority of cakes.

The bars did not do well in the Judge's taste test, she said, 

"I was unable to taste the blueberries in the Blueberry Muffin, although that was unsurprising as they were only 2% of total ingredients. The Bar had no physical resemblance to its namesake: it did not taste or look like a blueberry muffin.

Although it was possible to taste the ginger in Ginger Bread and the lemon in Lemon Drizzle, neither tasted like the cakes of the same name, and their texture was entirely different.  Apart from ginger and lemon, so too were the ingredients. No-one could have confused either Bar with their namesakes. Merely producing a cereal bar which tastes of ginger or lemon does not mean it should be classified as a cake."

The FTT found that the bars:

  • Do not look like most cakes.
  • Are not held out for sale as cakes and they would not look ‘in place’ on a plate of cakes.
  • Are not called ‘cakes’, but rather ‘bars’.
  • Are sweet to taste.
  • Are eaten with the fingers.
  • Are sold and marketed as snacks.

The FTT concluded that both types of bars were confectionery and not cakes and the appeal was dismissed.

VAT claim: quantum

Although no repayment was allowed, Morrisons' claim for repayment was in respect of all output VAT declared on their sales. The judge pointed out that this was incorrect. VATA s.80 provides that HMRC’s obligation would be to repay only the net amount (output less input VAT deducted), subject to any defence of unjust enrichment and the Court of Appeal had confirmed this was the position in Birmingham Hippodrome v HMRC [2014] EWCA Civ 684, and Rank Group plc v HMRC [2020] EWCA Civ 550.


VAT and food remain a complex area for VAT. Any businesses selling foods may wish to consider undertaking a VAT liability review.  

A useful point on VAT repayments that can often be overlooked.

Useful guides on this topic

Food: catering and takeaway
There is often confusion as to how food is treated for VAT purposes. There is a difference between hot food, cold food, food consumed on and off-premises, and of course between biscuits and cakes. Our guide explains the rules.

Let them eat VAT
Silly VAT fact of the day: Snowballs are cakes (the tax tribunal says so). (2014)

External links

WM Morrison Supermarkets Plc v HMRC [2021] TC08087 

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