Vat on xmas cards

Why is the printing zero rated?
Out of interest why is the printing z-rated? - I understood it would only be z-rated if it was printing for advertising purposes - do christmas cards classify as advertising - or more likely am I missing somthing here?

Thanks

Fair Point Darren,
Didn't pick up on that in the original question.

You don't often see Christmas Cards zero rated from the supplier primarily because they have a surface area for writing on and also because the zero rating is normally associated with fund raising or advertising in the media (newspaper ads for staff or funds).

Stricitly speaking, I'd be uncomfortable with a zero rated christmas card supply, unless the design is such that it is clearly fund raising, although it would be difficult to class it as advertising in the sense the zero rating intended but without seeing the design/content it's just a guess.

However, if the supplier has zero rated them then I'd be inclined to leave it that way. Worse case scenario is that HMRC inspect the supplier, they will raise a VAT liability to them, if they consider it not to be zero ratable, the supplier will then ask the charity to repay, which isn't an issue because as the cards are being sold at standard rate, input tax (ie, printing costs) would be recoverable anyway.

Alternative is to recind the zero rating certificate the charity issued (assuming it has done that, which it should have done) to the supplier and ask for supply to be standard rated and recover the VAT anyway - but all depends whether this is a straight Christmas card or something a bit more cross-functional so to speak.

Postage & Badges
Postage. Usually this follows the rate of the supply. So if it was a book, then the postage would be zero rated too. The P&P for cards would therefore be a standard rated supply. At this moment in time, only the post office issuing postage is an exempt supply, so if not a post office then it is a taxable supply based upon the rules just mentioned.

Badges/lapel pins are a slightly different matter and can get complicated. Normally a badge can be exempted if it has no intrinsic value and is to be given away (ie, when you donate a few coins you get a sticker to wear). It can include ribbons or metal badges but normally associated with something you wear on your clothes, so a big red nose for the front of your car would not qualify but a red nose metal badge for your jacket would.

If a charge is to be made for a badge/pin (ie, purchasing a badge), then VAT is to be charged at the standard rate. To avoid that the charity must ask for a 'suggested' donation but must ensure it is a free donation. In practice, if you could buy the badges online then they'd be standard rated, if you can get them free off a counter by making a deposit into a collection tin then they'd be exempt. Again, if a badge is paid for and posted, the P&P would be at standard rate.

Based on the limited details this forum allows for both the question and the response, I trust that all makes sense. For more info google "notice 701/58".

Is your charity VAT registered?
If it is VAT registered, you need to charge VAT. If it is not, you don't.