HMRC Eyes Up M&S's Viral Strawberry Cream Sandwich
- TBA
- Aug 1
- 4 min read
One of this summer’s most talked-about limited editions in the UK has undoubtedly been the strawberry and cream sandwich from Marks & Spencer (M&S). Despite online criticism over its £2.80 price tag and accusations of ‘shrinking’ ingredients, the product has consistently sold out upon release.
However, this viral hit has unexpectedly triggered a VAT (Value Added Tax) controversy, which could prompt an investigation by HMRC – and may even mean that some consumers have overpaid tax.
M&S's Strawberry Cream Sandwich: Dessert or Sandwich?
At the centre of the VAT debate surrounding M&S’s strawberry cream sandwich is a question of classification.
The product draws inspiration from Japanese fruit sandwiches (known as Sando) and consists of sweet bread filled with cream and strawberries, sold in ready-to-eat packaging in supermarkets. Ordinarily, this would be classed as a cold sandwich – considered a basic food item like bread, vegetables, fruit or milk – and therefore taxed at 0% under UK VAT rules.
However, given its soaring sales, HMRC has begun to question whether the product should instead be classified as a dessert – a category that generally attracts the standard 20% VAT rate.
What Foods Are Taxed as Desserts?
Under UK VAT legislation, the following are considered ‘confectionery’ and subject to the standard 20% rate:
Sweets, chocolates, ice cream
Any sweetened, processed food commonly eaten with the hands – such as doughnuts or cake bars
In the case of the M&S strawberry cream sandwich, the bread component is sweet (similar to sponge cake), the filling consists of sweetened cream and fruit, and consumers typically eat it with their hands.
Based on this, HMRC’s classification of the product as ‘confectionery’ seems at least somewhat justified.
M&S has yet to issue any public comment on the VAT treatment of the product, and HMRC has also remained silent. However, with continued public interest and professional scrutiny, the matter may ultimately be taken to court.
How Food Classification Affects VAT
As this case illustrates, determining the correct VAT treatment for food can often be ambiguous.
Many UK food items fall into a grey area between 0% and 20% VAT, and several high-profile cases have gone to court as a result.
Jaffa Cakes: Cake or Biscuit?
This familiar snack, consisting of a sponge-like base, fruit filling and a chocolate coating, has been at the centre of a longstanding VAT debate. If classed as a cake, it qualifies for 0% VAT; if classed as a chocolate-covered biscuit, it is taxable at 20%.
Ultimately, Jaffa Cakes were deemed to be cakes – and therefore VAT-exempt.
Mega Marshmallows: Confectionery or Cooking Ingredient?
Another famous dispute involved Mega Marshmallows. The manufacturer argued they were primarily for roasting over a fire, but HMRC contended that since they were typically eaten with the hands, they qualified as confectionery and should be taxed at 20%.
The case remains in dispute and has reached the UK courts, again highlighting the complexity of food-related VAT rules.
Packaging and Sale Method Also Affect VAT
Beyond food type, the method of sale can influence VAT liability.
For example, items sold individually may be taxed differently compared to when sold as part of a meal deal. A common example is dipping sauces: when sold separately, they may be considered cold takeaway food and attract 0% VAT.
This issue came to a head in a dispute between KFC and HMRC.
In 2019, Queenscourt, the supplier of KFC’s sauces, applied for a VAT refund on the basis that the sauces should be taxed at 0% when sold as part of takeaway meal deals – just as they are when sold alone.
However, HMRC disagreed, arguing that sauces are not standalone food items but are designed to enhance the meal. Therefore, when included as part of a hot food package, they should be taxed as part of a single standard-rated supply.
In June 2024, the court ruled in favour of HMRC. As a result, KFC not only lost the legal case but was ordered to repay £75,000 in VAT – plus legal fees.
For more on this case, see our earlier article: KFC’s Costly VAT Dispute with HMRC.
The view from TB Accountants
The VAT treatment of food in the UK is highly complex.
Whether you’re a consumer, food supplier, restaurant owner or supermarket operator, VAT rules will directly affect the prices you pay or charge – and influence your ability to reclaim or deduct VAT.
It’s also important to note that even if HMRC currently treats a product as zero-rated, it can reassess the classification within two years – or up to four years if it believes all relevant information wasn’t disclosed at the time. That’s why it’s essential to keep accurate records of your past transactions and business activity.
If you are involved in the food industry or considering investing, it’s advisable to speak to a qualified tax advisor first.
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