Teacake set to cost taxman £3.5m
The UK Treasury is facing a £3.5m bill, because of VAT wrongly imposed on a Marks and Spencer teacake, the European Court of Justice (ECJ) has ruled.
Customers paid VAT for 20 years before the authorities accepted the product was a cake, which does not command VAT.
The UK argued that paying back the total sum would "unjustly enrich" M&S as customers had paid the money.
The ECJ ruled that, in principle, VAT had to be repaid in full, but left the final decision to the British courts.
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