A BUSINESSMAN is locked in a £250,000 battle with the taxman over plans to charge him extra – because his nutritional workout bars are classed as sweets.
Tim Davies has been ordered to pay an extra 20 per cent VAT for the DuelFuel flapjack and 'recovery cake' bars.
The 55-year-old, of Henley on Thames in Oxfordshire, says he's already £253,000 out of pocket after wrangling with HMRC in a desperate bid to solve the problem.
He was forced to let go of an employee hired through the national Kick Start scheme after the problems began.
And he now fears the mess could sound the death knell for his company.
The former business consultant, who was made redundant during the pandemic, faces forking out a further £15,000 for lawyers so he can take the Government to a tribunal.
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He said: "HMRC determines that flapjacks and cakes are food and therefore are not subject to VAT.
"However, it classes nutritional bars as a luxury.
"That means they're subjected to VAT."
Mr Davies hopes the infamous Jaffa Cakes case back in 1991 will help a tribunal overturn HMRC's decision.
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Following a series of hearings, it was proved that the orange treats count as 'cakes' rather than biscuits.
The distinction means they can't be subject to VAT, along with flapjacks, pastries and birthday cakes.
By comparison, bars of chocolate, nuts or fruit with a chocolate coating, chewing gum, fruit pastilles and sherbet can all be charged at 20 per cent.
Bizarrely, marshmallow teacakes are untaxed – while marshmallows themselves are subject to VAT.
Mr Davies said he's faced huge confusion over the rules.
"HMRC just don't seem to care," he said.
"They just use the adage 'computer says no'."
A spokesperson from HMRC told Sun Online: “The VAT rules require a business to charge VAT at the standard rate of 20 per cent on the sale of an item of confectionery, unless it is a cake or a biscuit not covered in chocolate.
"For these purposes, confectionery includes any item of sweetened prepared food which is normally eaten with the fingers.
“A product is a cake or a biscuit if it has sufficient characteristics to be so categorised.
"HMRC accepts that a traditional flapjack can be treated as a cake and zero rated.
"However, a product that contains different ingredients and, for example, has been developed as a sports nutrition product falls to be confectionery and is standard rated.
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"Our policy is explained in guidance at VFOOD6200.
“HMRC does not comment on specific cases.”
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