In the Court of Appeal last week three judges restored the VAT Tribunal's original decision that regular Pringles are subject to VAT at the standard rate because they are similar to potato crisps.
Procter & Gamble had stood to recover more than £100m of VAT already paid and will be considering whether to take the case further to the House of Lords.
In the meantime, however, food manufacturers will view this ruling as unhelpful as it puts the onus firmly back on the VAT Tribunals to settle similar food liability disputes, but without providing detailed, coherent guidance that might help manufacturers answer this question for themselves.
According to the Court of Appeal, determining what is a potato crisp does not call for "...over-elaborate, almost mind-numbing legal analysis. It is a short practical question calling for a short practical answer."
Unfortunately, the legal provisions that determine whether a particular food product is subject to VAT are notoriously difficult to interpret and apply. The current law is based on the old Purchase Tax, which pre-dates the introduction of VAT in the UK in 1973. Manufacturing processes and product innovations have moved on significantly since then.
The problems with the current legislation are compounded by restrictions imposed by the EU that dictate that the UK government cannot extend the list of food products that are zero rated. This means that a level playing field could only be achieved by making all food subject to VAT, which no political party is likely to advocate.
P&G had continued to charge VAT on regular Pringles, so past VAT has been properly accounted for. Howevers, consumers won't now have the benefit of not paying VAT on these products - and the decision could have wider implications.
The court suggested a child might answer the question of whether a snack is made from potato in a more relevant and sensible way than a scientist or food expert. I asked my five-year-old and he thinks anything crunchy that comes in a bag is a potato crisp, which is clearly wrong. Let's hope future Tribunal chairmen don't use the same test.
Toby O'Reilly is a tax director at Ernst & Young.