2nd April 2026
The First-tier Tribunal has decided that ‘Mega Marshmallows’ are zero-rated food, and not standard-rated confectionary.
In 2022, the FTT decided that ‘Mega Marshmallows’ were not confectionary in the ordinary sense of the word, applying the conventional multi-factorial test. The FTT’s decision was upheld by the Upper Tribunal.
However, in 2025 the Court of Appeal decided that the FTT should have considered the specific – factual – question of whether they were ‘normally eaten with the fingers’. This question of fact was remitted to a different FTT panel to decide.
The new FTT panel has decided that, as a matter of fact based on all of the evidence, ‘Mega Marshmallows’ are not ‘normally eaten with the fingers’. They are zero-rated for VAT purposes. HMRC’s VAT assessments for June 2015 to June 2019 are overturned.
The FTT decided that answering the question remitted by the Court of Appeal still required the application of a conventional multi-factorial assessment.
HMRC’s arguments that the burden of proof was on Innovative Bites to show its ‘Mega Marshmallows’ were not ordinarily eaten with the fingers, and that the Appellant did not have sufficient evidence to do so, were rejected by the FTT. Applying conventional principles of VAT analysis – including the evidence about how typical consumers roasted them and used them to make s’mores, and how they were packaged and marketed for sale – the FTT found as a fact they were ‘more frequently eaten by one of the non-finger ways than by one of the with-the-fingers ways.’
This decision underscores the importance of both understanding and properly evidencing how food products are packaged, marketed, prepared and consumed. It also highlights the FTT’s likely approach to resolving factual disputes.
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