Make potato crisps that are not potato - and save tax

July 8th, 2008 - 12:22 pm ICT by IANS  


London, July 8 (IANS) Potato crisps that can save millions in taxes? Yes, but only if they contain less potato. The next time you want potato crisps don’t reach out for Pringles — a British court has ruled that the famous potato crisps are not really potato at all. As a result, Pringles are now exempt from value added tax (VAT), which can save its manufacturer Proctor & Gamble (P&G) millions of pounds. Customers will have to pay less too.

Facts that the crisps come in tube, that they have an unnatural shape and that the potato content in them is less than 50 percent helped the high court come to the conclusion.

P&G had gone to court to challenge a VAT and Duties Tribunal decision that Pringle was subject to the standard 17.5 percent rate of VAT because it was “a potato crisp product”, which are, unlike most food, subject to the tax.

Under law, a product “must be wholly, or substantially wholly, made from the potato” to attract VAT.

But the manufacturer had insisted their best-selling product was not similar to potato crisps, because of their “mouth melt” taste, “uniform colour” and “regular shape” which “is not found in nature”.

It also argued that potato crisps - unlike Pringles - did not contain non-potato flours, and were not packaged in tubes, reports the BBC.

This is not the first time that the shape or content of a vegetable has become a subject for debate. The Food and Agricultural Organisation and the World Health Organisation spent seven years before deciding what qualifies as a proper tomato.

Their ruling says tomatoes may be round, ribbed, oblong or elongated, or can be cherry tomatoes or cocktail tomatoes. Other characteristics include being clean, whole, fresh in appearance, and free from foreign smells and pests.

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