I have a query regarding the treatment of a supply of goods for VAT purposes when there are different elements included in a single supply (i.e. zero rated and standard rated items together).
Background - I am starting a subscription box business for children. Customers will receive a box through the post each month which essentially includes a children's fiction book of 2 characters who go back in time each month to a different period in history. Customers will sign up to receive this monthly, and can cancel at any time.
The box will include the following on a monthly basis:
· Fiction book
· History booklet (with activities e.g. word searches etc. also in it) relating to the period of history in the fiction book
· A6 sized card with codes on it to be used to solve puzzles in the booklet (e.g. in Ancient Egypt box - a card with Hieroglyphs on it)
· Bookmark
· Stickers
· Colouring Sheets
· A "collectible" - essentially a small toy (e.g. a small statute, a keyring, a pen quill or something else related to the period in history in the book)
· A craft will also be included - e.g. clay and paints to make something that is described in the story.
In the first month the following 2 free items will also be included:
· A map and timeline (A1 sized wall map, with timeline)
· A pack of colouring pencils
My question is whether this could be treated as a single zero-rated supply, as the principal element of the box is the fiction book and history booklet and all of the other elements are a means of better enjoying the principal goods supplied - the books.
For instance, I know that you can buy books packaged with a cuddly toy and this is treated as a single zero-rated supply as the cuddly toy is ancillary to the enjoyment of the main supply (the book).
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Replies (9)
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Get paid for advice
I would love to give you an answer but you really need to let someone see what you are proposing to sell and then get advice as you are into a very grey area here.
From your description, I do think that you have a single supply. I think that single supply is standard-rated. Maybe a paid for adviser would be prepared to come up with an argument (like baking a big jaffa cake) to the contrary.
CCP, etc.
Shaun King is right. This is an extremely complex area, with loads of case law, on top of HMRC guidance. But an interesting question, nevertheless!
CCP is but one of many cases on the question so paid for advice is preferable to a quick yes it is without seeing the product(s)
CCP?
CCP is the first of the case law, but there are later cases which will need to be considered; hence the need for paid-for advice.
CPP?
I think you re missing PNL's point (he says hoping he's not making a complete mug of himself by venturing into rarely seen territory)