UK Tax Court Says Pringles aren’t Crisps

A rose by any other name would smell as sweet, but a potato snack that isn’t called a “crisp” (“chip” for US readers) doesn’t have to pay Britain’s 17.5% value-added tax. So, the people at Procter and Gamble went to tax court in the UK to have their Pringles brand snacks, which are clearly labeled as “potato crisps” on the container, declared “not crisps” for tax purposes. On Friday, the judge declared P&G correct; Pringle’s aren’t crisps.

Most food in Britain isn’t taxed. However, the national tax authority said Pringles came under a clause that permitted the taxation of junk foods like potato crisps, puffs, sticks, “and similar products made from the potato, or from potato flour, or from potato starch.” Well, 17.5% is worth fighting over when one sells as much of the stuff as P&G.

The company’s lawyers invoked an inverse of the 1980s “duck test” – if it looks like a duck, waddles like a duck and quacks like a duck, it must be a duck. P&G’s legal team noted Pringles, which stack nicely in a can, don’t look like crisps, don’t feel like crisps and don’t taste like crisps. The thingies are baked from dough and are not fried slices of potato. Moreover, real potato crisps “give a sharply crunchy sensation under the tooth and have to be broken down into jagged pieces when chewed. It is totally different with a Pringle, indeed a Pringle is designed to melt down on the tongue.”

Justice Nicholas Warren at the High Court in London ruled that for the purposes of VAT, Pringles aren’t “made from potato.” He said they aren’t crisps and, therefore, are not subject to the 17.5% tax. However, he didn’t say what they are either. This could bring up some trouble for P&G as a result.

One could cogently argue that if Pringles aren’t taxed as potato crisps, P&G shouldn’t be allowed to sell them as such. As noted, though, that’s what each and every can of them claims to contain. By the same token, the list of ingredients on that same container says [upper case letters in the original], “INGREDIENTS: DRIED POTATOES, VEGETABLE OIL (CONTAINS ONE OR MORE OF THE FOLLOWING: CORN OIL, COTTONSEED OIL, SOYBEAN OIL, AND/OR SUNFLOWER OIL), RICE FLOUR, WHEAT STARCH, MALTODEXTRIN, SALT AND DEXTROSE. CONTAINS WHEAT INGREDIENTS.” Funny, it seems the first ingredient is . . . potatoes. An appeal is likely to succeed.

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