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Because cakes are subject to VAT (value added tax), whereas biscuits are not. Adding VAT to a good increases it's cost, thereby reducing sales. McVities (the producer of jaffa cakes) did not want the jaffa cake to be classifed as a cake, thus subject to VAT.

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Q: Why did jaffacakes go to court to prove they were a cake not a biscuit?
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