Pringles lose crisp battle in Court of Appeal

Posted by Janice Wong on 27th May 2009

Pringles have been officially been declared as potato crisps (chips) in the UK, obliging Procter & Gamble to continue paying millions of pounds in value added tax (VAT).

In Britain, most bakery products such as cakes and bread are free from the VAT, but potato crisps are liable for the 15 per cent tax. As a result, Procter & Gamble have been trying to overturn a decision which lists Pringles as a potato chip.

Last year, at the High Court in the UK, Procter & Gamble claimed that Pringles were different to that of potato crisps because of its formed shape, baking method, potato content and tubed-shaped packaging. Justice Nicholas Warren agreed that, with only 42% potato content, Pringles should not be considered a potato crisp.

However, judges at the Court of Appeal disagreed.

“There is more than enough potato content for it to be a reasonable view that it is made from potato,” Lord Justice Jacob declared at the hearing.

Procter & Gamble do not have to hand over back-tax as they have been paying VAT pending the decision of the appeal, but estimates suggest that the product provides £20m (A$40.6) a year in VAT to the tax department.

The long running case – P&G won on appeal last year – is not necessarily over yet, with the consumer products giant still mulling their options with lawyers.