FRV Limited Cost Trader defining Advertising Costs

Advertising Costs excluded for Limited Cost Traders - definition needed please.

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Hi, we would appreciate your opinion on the definition of 'advertising costs' which are excluded by HMRC as being 'goods' for inclusion as Limited Costs. We cannot find any HMRC definition of what they are and are not.

Would 'advertising costs' simply refer to the service of booking and placing advertising or do they also include ordering the production of printed business related marketing material; brochures, leaflets, news-sheets and signage which we (importantly) design ourselves and get printed by a VAT registered printer? Also importantly we will distribute the marketing material ourselves by hand / through the post and will put the signage up either ourselves or pay someone separately for that service. The marketing material is specifically for our business and is designed in-house to generate more business. It is not sold, nor a gift (like a branded calendar, diary or pen) and nor is it likely to last longer than one use in the case of a brochure/leaflet or two or three uses over a year should we be able to re-use signage.

We are doing a rebrand and marketing drive for our property related business. Your advice is greatly appreciated and perhaps may be useful or even an unintentional boost to businesses faced by the imminent FRV changes (other than printers of course).

Replies (7)

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RLI
By lionofludesch
30th Mar 2017 09:14

Goods generally has an ordinary everyday meaning which you can look up in any dictionary.

With few exceptions, if you can hold it in your hand, it's goods.

Software you buy on a disk is goods, the same software off the internet isn't.

Crazy but true.

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By JonnyM68
04th Apr 2017 13:52

Thanks for replying lionofludesch but I don't think HMRC use the dictionary definition of goods unfortunately.

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Replying to JonnyM68:
RLI
By lionofludesch
04th Apr 2017 14:14

And they say English is the official language of the UK.

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By Ruddles
04th Apr 2017 14:23

It's an interesting question, but you have to establish exactly what it is you are paying for - what does the invoice say?

If I pay to have a book printed, I'd say that is almost certainly a supply of services. If you then go and buy the book that would be a supply of goods.

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boxfile
By spilly
04th Apr 2017 15:55

Advertising is a service that you are paying for to promote your business. It is not goods that are used in your business, which is probably why HMRC are excluding it.

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Replying to spilly:
RLI
By lionofludesch
04th Apr 2017 16:36

Surely we've not got to the stage where HMRC are making a decision yet ?

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By JonnyM68
04th Apr 2017 16:20

Thanks for replying Spilly and Ruddles. Unfortunately I do not think we yet have an answer as to whether printed marketing material and signage produced specifically for a business (with the design provided by that business and material subsequently distributed by it) are goods or services or whether they fall under the 'advertising costs' definition? Obviously the printed material has to have VAT at the standard rate in the first place rather than be zero rated.

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