Let’s start with a little quiz. In a British supermarket, if you purchase the following three snacks, which do you think are subject to a 20% VAT? Tortilla corn chips, Calbee chips, or Pringles? If your answer was ‘all of them,’ I’m afraid you’re mistaken. The correct answer is: corn chips are exempt from VAT, Calbee chips incur a 20% VAT, and Pringles are also subject to VAT. Many people find this answer puzzling, and it’s common for first-time listeners to be left scratching their heads.
I first took notice of this issue while shopping at Costco Wholesale. At Costco, one often encounters a subtle situation: some food items are priced with VAT included, while others require an additional 20% VAT on top of the listed price. Sometimes, when I see something that seems cheaper, I think to myself, ‘What luck today, I’ve found a bargain.’ However, upon reaching the checkout, I discover that the price was just before VAT, and my earlier excitement feels a bit premature.
My curiosity was piqued recently when I bought two bags of snacks at Lidl. One bag was Tortilla corn chips, and the other was Calbee chips. Both are crunchy snacks with similar consumption methods. Upon reviewing the receipt at home, I noticed that the corn chips had an ‘A’ next to their price, indicating a 0% VAT, while the Calbee chips had a ‘B,’ meaning an additional 20% VAT was applied. I couldn’t help but ask, ‘Both are broadly classified as
why is there such a significant difference in tax rates? Is it because Calbee is an imported product, and the tax is higher to protect local goods?
Upon further investigation, I discovered that this discrepancy stems from a rather ‘historical’ and somewhat absurd tax logic. The fundamental principle of VAT in the UK is quite straightforward: basic food items are exempt from VAT. However, the law also lists several exceptions, one of which is explicitly stated: potato crisps. Any snack classified as crisps or similar is subject to a 20% VAT. Conversely, snacks made from corn, rice, or other grains can often be categorized as ordinary food, and thus are exempt from VAT. This leads to a rather amusing outcome: corn chips are exempt from VAT, but crisps are not.
The situation became even more intriguing when this rule was taken to court. The protagonist of this story is the well-known Pringles. The manufacturer believed it was being wrongly taxed, leading to the famous case of Procter & Gamble versus the UK tax authorities. Their argument was somewhat unconventional: Pringles are not actually crisps. Pringles contain only about 42% potato; the remaining ingredients include wheat starch and other materials, and they are produced through a process of molding rather than slicing and frying potatoes. In other words, they aimed to prove that ‘Pringles are a processed snack, not crisps.’
The proceedings became quite dramatic. The court began discussing questions typically reserved for snack conversations, such as: Are Pringles crunchy? Do they dissolve in the mouth like crisps? Do consumers consider them crisps? There were even claims that court officials actually sampled the product. Imagine the scene: judges sitting in court, reviewing legal texts while munching on Pringles. ‘Hmm, quite crunchy.’ ‘And they do dissolve in the mouth.’ ‘Feels similar to crisps.’ If someone happened to walk past the courthouse, they would find it hard to believe that a serious legal debate was underway, centered on the question: ‘Does this item qualify as a crisp?’
Ultimately, the court concluded that regardless of how one defines it, Pringles taste, look, and feel like crisps. Therefore, the ruling was straightforward: Pringles are indeed crisps and thus subject to VAT. Many people question why the tax authorities do not simply amend these peculiar rules. The reasons are quite pragmatic. First, food VAT involves a substantial amount of revenue. Arbitrarily redefining terms could impact the pricing of the entire food market. Second, if the government attempts to redefine ‘snacks,’ things could become even more complicated. For instance, do popcorn and cookies count as snacks? What about energy bars? This could lead to even more bizarre court debates.
Consequently, the government’s choice is often to leave things as they are, as long as they continue to function. For consumers, there are a few tips to keep in mind. When shopping in the UK, a simple rule to remember is: crisps usually incur VAT, ice cream typically incurs VAT, but many ordinary food items do not, especially when shopping at wholesale stores like Costco. It’s wise to check whether the listed prices include VAT; otherwise, you might be in for a little surprise at checkout. Nevertheless, even with this tax knowledge, I will likely continue purchasing Calbee chips and Pringles, even if it means paying a bit more VAT. After all, life is too short to worry about a 20% tax on a bag of crisps.
