Are Jaffa Cakes biscuits or are they actual cakes?
As far as the taxman is concerned they are cakes rather than biscuits and it’s an important distinction. Because value added tax (VAT) is payable on chocolate-covered biscuits which are regarded as ‘luxury items’ but not on chocolate-covered cakes. And in 1991 McVities, the makers of the popular sweet snack, had to demonstrate in court that Jaffa Cakes were indeed cakes.
Central to McVities’ argument was that, while bisuits go soft when stale, cakes normally go hard. To make their point, McVities baked a 12-inch-wide Jaffa Cake into court to show that it would harden as it grew stale. The court ruled in McVities’ favour and therefore to this day, VAT is not paid on Jaffa Cakes.
While Jaffa Cakes look like and are packaged like biscuits, as long as chocolate-covered biscuits are VAT-payable, McVities will insist upon them being miniature cakes.