February 5, 2009

Retailer to get tax refund for cakes

British retailer Marks & Spencer has won a refund for taxes paid on sales of a snack that was eventually found to be exempt from taxation.

Members of the House of Lords ruled that Her Majesty's Revenue & Customs must refund the $5.1 million in taxes that Marks & Spencer paid for sales of its marshmallow tea cakes between 1973 and 1994, when authorities ruled that the food items are cakes, which are exempt from taxation, and not luxury snacks subject to the value added tax, The Daily Telegraph reported Thursday.

Experts said Marks & Spencer will also likely receive back interest and costs in addition to the $5.1 million.

This will end up being a very valuable judgment for M&S, said Paddy Behan, a value added tax specialist at accounting firm Vantis.

After 13 years of litigation we're pleased this matter has finally concluded, a Marks & Spencer spokesman said.