Thursday, May 21, 2009
I previously blogged the July 4, 2008 decision by Britain's High Court (Chancery Division) that Pringles are not potato chips and thus are exempt from Britain's 17.5% VAT. Procter & Gamble UK v. Revenue & Customs,  EWHC 1558 (Ch) (July 4, 2008). With Memorial Day approaching, Britain's Court of Appeals has reversed, holding that Pringles contain "more than enough potato content" to be considered a potato chip. Revenue & Customs v. Procter & Gamble UK,  EWCA Civ. 407 (Ct. App.) (May 20, 2009):
Are Pringles "similar to potato crisps and made from the potato?" That is the question. Upon it hangs the question of whether rather a lot of money, as much as £100m of tax for the past and about £20m a year for the future according to Mr Christopher Vajda QC for the Commissioners for Her Majesty's Revenue and Customs ("HMRC"), the appellants in this appeal. ...
In the course of his urbane submissions on the "made from" aspect of Regular Pringles Mr Cordara QC referred to "the potato as a fiscal contaminant", the "essential characteristics of the paradigm potato crisp", the absence of "findings of potatoness" and the "quantitative role of the potato." In contending that Pringles (42% potato, 33% fat) were not "made from" the potato he put forward this proposition:
"If a product has a number of significant ingredients it cannot be said to be 'made from' one of them."
So it is argued that Regular Pringles, which also contain fat and flour, cannot be said to be "made from the potato."
The response to these points is that it is vital to recall why the Tribunal was required in the first place to answer the question whether the goods in question are "made from" the potato. It was not in answer to a scientific or technical question about the composition of Regular Pringles, or in response to a request for a recipe. It was for the purpose of deciding whether the goods are entitled to zero rating. On this point the VAT legislation uses everyday English words, which ought to be interpreted in a sensible way according to their ordinary and natural meaning. The "made from" question would probably be answered in a more relevant and sensible way by a child consumer of crisps than by a food scientist or a culinary pedant. On another aspect of party food I think that most children, if asked whether jellies with raspberries in them were "made from" jelly, would have the good sense to say "Yes", despite the raspberries.