Tesco launches limited-edition birthday cake sandwich in meal deal

Credit: Tesco

Tesco has launched a limited-edition Birthday Cake Sandwich in 1,000 UK stores from today, featuring the flavours of a classic Victoria sponge with birthday cake-style sprinkles. Priced at £3 standalone, it is also included in Tesco’s meal deal at £4 (£3.60 for Clubcard holders). The sandwich will only be available for four weeks.

This builds on the viral success of M&S’s Strawberries & Cream sandwich, which layered strawberries and whipped cream cheese between sweet bread when it launched during Wimbledon.

Tesco’s cake sandwich taps into the growing trend for sweet, dessert-style sandwiches, but with limited availability, consumers will need to act quickly.

Cake or sandwich? VAT debate

The rise of sweet sandwiches has sparked debate over their classification and tax treatment. The M&S sandwich was controversially classed as a sandwich despite its high sugar content, raising questions about whether it should be taxed as cake.

The UK zero-rates most food for VAT, but applies a 20 percent VAT rate to confectionery, including cakes and biscuits.

Laura Court-Jones, Small Business Editor at Bionic, warns of the risks for businesses considering similar hybrid food products:

Trends like this are worth watching closely, the surge in demand offers opportunities, but also potential tax pitfalls for small businesses.”

If a small business similarly misclassifies a product and fails to pay the correct VAT, it could face:

• Penalties: HMRC can impose significant penalties, with up to 30 percent for careless errors and up to 70 percent or more for deliberate ones.
• Interest charges: Interest is applied to any unpaid VAT starting from the original due date.
• Legal disputes: Unclear tax classifications can trigger costly legal disputes and uncertainty, as seen in the M&S case.

Laura added:

Many small food businesses are innovating with exciting menus, but if you misjudge a VAT rule, you could face a costly inspection. For small food businesses hoping to jump on this summer’s trends, the message is clear – check your tax classification before putting sweet sandwiches on the menu.”