I understand it was decided in 1991 that they were to be classified as a cake by Customs & Excise. Chocolate-covered biscuits have to have 20% VAT added and chocolate-covered cakes do not, so this was an important issue for the manufacturers - and lovers of Jaffa Cakes. The Adjudicator, Potter, QC, accepted McVities' arguments that Jaffa Cakes were like cakes in that they get hard when stale, whereas biscuits go soft. Technically, it was all about moisture ratios. It may be that he was also swayed by the argument that they were mainly eaten by children. Most people would regard them as a biscuit, but since that means paying 20% extra, they keep quiet about it. Of course, most Hubbers are American and won't have a clue what we are on about. These are cookies.