The Sharpest Legal Minds Money Can Buy

In other versions of English, and in many European languages, a biscuit is a hard baked product like a small flat cake which in North America may be called a "cookie" or "cracker". The term biscuit also applies to sandwich type biscuits, where a layer of 'cream' or icing is sandwiched between two biscuits. It should be noted, however, that it has become increasingly more common within the UK and Australia for "cookie" to be used to differentiate between the softer, more chewy "cookie" and the harder, more brittle "biscuit."^{[citation needed]} In this respect the British usage of the word biscuit was defined in the defense of a tax judgement found in favor of McVitie's and their product Jaffa cakes which the Inland Revenue claimed was a biscuit and was therefore liable to value added tax. The successful defense rested on the fact that 'biscuits go soft when stale, whereas cakes go hard when stale.'
-http://en.wikipedia.org/wiki/Biscuit

Under UK law, no VAT is charged on biscuits and cakes — they are "zero rated". Chocolate covered biscuits, however, are classed as luxury items and are subject to VAT at 17.5%. McVitie's classed its Jaffa Cakes as cakes, but in 1991, this was challenged by HM Customs and Excise in court.^[1] This may have been because Jaffa Cakes are about the same size and shape as some types of biscuit. The question which had to be answered was what criteria should be used to class something as a cake or biscuit. McVitie's defended the classification of Jaffa Cakes as a cake by producing a giant Jaffa Cake to illustrate that their Jaffa Cakes were simply mini cakes.

They also argued that the distinction between cakes and biscuits is simply that cakes go hard when stale, whereas biscuits go soft. It was demonstrated that Jaffa Cakes become hard when stale and McVitie's won the case.^[2]

The issue was revisited in an article entitled 'Are Jaffa Cakes really biscuits?' published in the Journal of Unlikely Science (Volume 1, issue 7, 2005). ^[3] The article attempted to classify biscuits via a scientific analysis of various features (size, shape, filling etc.) and determined that the Jaffa Cake should be regarded as a biscuit, or 'pseudobiscuit'.

-http://en.wikipedia.org/wiki/Jaffa_cake