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Output VAT Multiple Supplies

Output VAT Multiple Supplies

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Good Afternoon All,

I am wanting some advice or guidance on a query I have regarding a client. The question, which when I say it out loud seems a simple one, yet I am struggling to find an answer - well a straight one!

My client supplies packs to parents which include a storybook, and e-book, an accessories kit (basically stationary), and a dolls house with dolls. We both agree this is a multiple supply half being xero rated and the other half being standard. So, the question is, does he charge VAT on the whole amount for example £20 + VAT being £24.

I understand that there is a calculation to apportion of the output VAT based on the cost of the items to us but is that the apportionment we must use when we supply the goods too? So, £20 + vat on the std rated items based on the apportionment?

After reading I had been following the https://www.gov.uk/guidance/vat-guide-notice-700#apportionment-of-output... sec 31.2.1 I read it as we charge the whole amount of the VAT so £4?

Any help or practical examples would be greatly appreciated.

Thank you in advance

 

Replies (5)

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By the_drookit_dug
28th Aug 2020 17:14

"I understand that there is a calculation to apportion of the output VAT based on the cost of the items to us but is that the apportionment we must use when we supply the goods too? So, £20 + vat on the std rated items based on the apportionment?"

Not really following you. If it's a multiple supply, you only charge VAT on the standard rated items.

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By paul.benny
28th Aug 2020 17:38

If it's half zero-rated and half-standard rated, you account for 0% on half the selling price and 20% on the other half.

The VAT on the inputs is completely irrelevant.

From your description, I'm not convinced by it being half and half - there sounds to be a lot of standard-rated content. I'd challenge your client's split. The book, in particular, is likely to be sold separately.

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Replying to paul.benny:
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By addamwalker
29th Aug 2020 10:33

Thank you for your response, but under 701/10 are books not zero rated?

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Replying to addamwalker:
RLI
By lionofludesch
29th Aug 2020 10:44

Yes. Always have been.

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RLI
By lionofludesch
29th Aug 2020 07:03

Well, it's not what para 31.2.1 says. It's like a miniature retail scheme and your choice of methods depends on the information you have.

If the zero rated stuff costs you, say £5, and the standard rated stuff costs you £5 + VAT and the selling price is £22, then the VAT output tax is

£22 × (5+1)/(5+5+1) × 1/6 = £2

There are other acceptable methods and, like the VAT retail schemes, they won't all give the same answer. Work through all the options in the VAT Notice.

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