A Cake or a Biscuit⏤The Lengthy and Expensive Saga of the Jaffa Cake.

For anyone watching this who, like me, happens to be from the UK, you're more than likely already well aware of what a Jaffa Cake is.

For our viewers that haven't had the pleasure of sampling one of the greatest comfort foods ever created,

they're little spongy, chocolate-coated disks that contain a small amount of orange-flavored jam.

They really are delicious.

Oh, and there's another point here: They were also once at the center of one of the fiercest court battles of the 1990s,

with the lengthy and expensive case determining one and only one thing: whether or not the Jaffa Cake is a cake or a biscuit.

Yes, really.

But before we get to all of that, for the sake of the unfamiliar, we have to first discuss the thrilling and exciting world of European Tax Law and Value-Added Tax.

In a nutshell, Value-Added Tax (commonly shortened to V-A-T or VAT) is described as being:

"A type of consumption tax that is placed on a product whenever value is added at a stage of production and at final sale."

In essence, VAT is a tax that is paid by everyone involved with the manufacture of a given object or foodstuff and the consumer.

For example, if a company in the UK wanted to make socks, they'd be charged VAT on the price of the raw materials used to make them.

When that company sold the socks onto a retailer, the retailer would, similarly, be charged VAT on that sale.

Finally, when the retailer sells the socks to the consumer, the consumer will pay VAT on top of the price charged by the retailer.

At the time of the publishing of this video, the VAT rate in the UK is 20% for, to quote the official website of the British Government, "most goods and services".

Now, because the government isn't a cartoonishly evil entity rubbing their hands together at the thought of charging people through the nose for everyday essentials (right?),

a number of things are subjected to a reduced rate of VAT⏤currently 5%⏤while some other items are exempt from this tax altogether.

Goods and services subjected to the reduced rate of VAT include things like mobility aids (like walking canes and those awesome scooters)

and sanitary products (think tampons, pantyliners, and other things that make certain men wary of looking in a woman's purse).

As for things that are exempt from the tax entirely, this is mostly limited to goods and services that are considered essential or otherwise unfair to try and tax citizens for using.

Things like stamps, burials, and end-of-life care, as well as, actually, most food.

In regards to that last item, while most food, and by extension, animal feed, is exempt from VAT, certain so-called "luxury items" are taxed at the normal rate.

Such items include alcohol, mineral water, confectioneries, and, rather unusually, biscuits that are covered with chocolate⏤regular biscuits are, notably, exempt.

This led to an embittered court battle between the British Government and McVities in 1991,

when British Customs and Excise decided that Jaffa Cakes should be reclassified as chocolate-covered biscuits and, hence, be liable to the standard rate of VAT.

Jaffa Cakes had previously been considered to be cakes by Customs and Excise, something that is exempt from a tax.

As such, one of the largest manufacturers of Jaffa Cakes, McVities, challenged this decision and took it all the way to the highest court in the land.

According to the official website for Her Majesty's Revenue and Customs, the decision of the courts hinged on being able to clarify exactly what made a cake a cake and what made a biscuit a biscuit,

and arguing whether or not Jaffa Cakes conformed more to one definition or to the other.

Towards this end, the main arguments on behalf of Customs and Excise were that Jaffa Cakes are usually sold along side biscuits, are roughly biscuit-shaped, and often consumed in place of them,

adding that McVities themselves markets the product more like a biscuit than a cake.

McVities countered this by stating that Jaffa Cakes were produced in a manner almost identical to that of a traditional sponge cake,

and they contained the same base ingredients⏤flour, eggs, and sugar.

McVities' trump card, however, was pointing out that cakes and biscuits go stale in almost opposite ways, with cakes turning hard as they go stale and biscuits turning soft.

To illustrate this point, McVities left a bunch of Jaffa Cakes out in the open and later presented them to the court, proving that, like cakes, they hardened as they went stale.

According to the BBC, to really seal the deal, McVities baked a gigantic, 12-inch version of the Jaffa Cake and brought it to court to show off how similar it is to a cake when blown up to normal cake size.

For anyone wondering why the courts didn't take into account the fact that they're called Jaffa "Cakes",

well, the judge presiding over the case, Mr. D.C. Potter, was asked to consider this and ruled it to be of "no serious relevance" because a product's name often has little to do with its actual function.

In the end, the court decided the Jaffa Cakes were, indeed, cakes, and McVities was allowed to continue selling the product without it being subject to VAT.

And now, for some bonus facts.

Pringles were originally called "Pringles Newfangled Potato Chips".

However, Pringles only contains about 42% potato-based content, with most of the rest being from wheat, starch, and various types of flour, including from corn and rice.

Thus, the US Food and Drug Administration made them change the name because their product didn't technically meet the definition of a "potato chip".

So, they were only allowed to use the word "chip" in very restrictive ways.

Specifically, if they wanted to continue to use "chip", they were only allowed to say, "Pringles potato chips made from dried potatoes".

Not being too fond of this requirement, the company changed the name slightly, using potato "crisps" rather than potato "chips".

Today, of course, most people know them as just "Pringles".

Now, this actually brings us to a rather interesting UK connection.

In order to avoid the Value-Added Tax, Proctor & Gamble argues in the UK that Pringles should be considered a cake rather than a "crisp",

since only 42% of the product was made from potato and it is fashioned from dough.

The company won in the high court, and Pringles were briefly considered a cake in the UK.

However, Her Majesty's Revenue and Customs appealed the decision and, in 2009, the ruling was reversed and the company had to start paying VAT.

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