British Court of Appeal Rules on Snack Food Tax Status
The British Court of Appeal has determined that “Regular Pringles,” a snack food made by Procter and Gamble, are subject to the value-added tax under a provision that applies to “potato crisps, potato sticks, potato puffs and similar products made from the potato, or from potato flour, or from potato starch.” Revenue & Customs v. Procter & Gamble UK,  EWCA Civ 407 (Eng. & Wales Ct. App. (Civ. Div.), decided May 20, 2009).
Foods are generally not taxed in Britain, but an exception has been carved out for “food not normally bought primarily for nutrition but eaten as snacks.” The question before the court was whether the Pringles chips, with just 42 percent potato flour content, are “similar to potato crisps and made from the potato.” The company apparently argued that products subject to the tax should be made from 100
percent potato or near 100 percent, to give the product a quality of “potatoness.” The court disagreed and found the company responsible for £100m in taxes for past sales and approximately £20m annually in the future.
According to a news source, the company has apparently been paying taxes on the product while the case has been pending, so no back taxes will be due. See The Guardian and The Associated Press, May 20, 2009.