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Despite its name, people still debate to this day whether the Jaffa cake is in fact a cake or a biscuit. But, would this be the case if people knew their status would affect their cost?

Named after Jaffa oranges, the Jaffa cake was invented as a small cake by McVities in the 1920s. However, in 1991, the cake/biscuit debate was taken to a VAT tribunal as HMRC argued the cake was more like a chocolate covered biscuit, meaning it should be subject to VAT.

So, let’s look at both sides of the argument.

JaffaFirstly, the UK law defines biscuits, cakes and chocolate covered cakes as necessities, however, chocolate covered biscuits are regarded as a luxury and therefore, full VAT is payable.

The argument started when consumers were using Jaffa cakes in place of biscuits. Not only are they shaped and sized similarly to biscuits, but are presented in a biscuit packet and are eaten with fingers rather than a fork. It’s also no sec ret that Jaffa cakes are found in the biscuit aisle of supermarkets and not with cakes and other baking confectionery. You can dunk them in your tea and you do not give them to people on their birthday (try and convince people at this point that they are a type of cake!)

The argument that McVities presented was that the Jaffa cake is made up of a layer of sponge, a layer of orange jelly and a chocolate coating, arguing that the sponge likened the Jaffa cake to a cake and not a biscuit. They also argued that biscuits go soft when stale and cakes harden – like the Jaffa cake. McVities won their case and the court ruled that the Jaffa cake was part of the cake family and therefore, zero-rated under VAT.

For me, Jaffa cakes will always be a biscuit. Despite their texture, they belong in the biscuit tin, however, I will accept their cake status if it means not having to pay an extra 20% VAT on them!

The argument still goes on as in 2012, they were ranked the best selling cake OR biscuit in the UK.