The company concerned was Dodadine Ltd trading as toucanBox (TC07505).
It sold three products designed for children aged between three and eight, which consisted of reading matter and materials for craft activities, linked to a particular theme, eg kings and queens.
In the case of “super” and “grand” packages, which sold for £19.90 and £12.90 respectively, HMRC accepted there was a mixed supply of a zero-rated book and standard rated craft activities, so output tax was apportioned.
However, with the “petite” product, the book was replaced by a magazine so that it could slide through a letterbox when delivered to the customer, and the package was sold for £5.95. HMRC challenged the view that the “petite” was a mixed supply and assessed output tax, treating it as wholly standard rated.
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