VBOOKS6000 - Books: Printed matter supplied with other goods
When to use this section
You should have now satisfied yourself that your supply of printed matter is one of goods, and not of services. This section is intended to enable you to determine the correct liability, where articles of printed matter which would normally be zero-rated are supplied in conjunction with other, non-printed matter goods.
- If you are not sure that your article of printed matter would be zero-rated if supplied on its own, you should go to VBOOKS3000 and return to this section once you have clarified matters.
- If you are considering a package which consists entirely of articles of printed matter, you should ignore this section and move on to the guidance on the package test at section VBOOKS8000.
- Some articles are incapable of physical separation, but nevertheless contain elements of both printed matter and stationery or toys - for example booklets with both text and spaces to fill in, or children’s books containing cut-out models. In these circumstances, you should consult VBOOKS3000 to decide whether the item can be zero-rated under Group 3.
How to use this section
In considering the liability of printed matter supplied with other articles, you are considering the principle of supply. We give extensive guidance on this in VATSC - Supply and consideration, which you should refer to in order to establish the supply position. The guidance here does not override VATSC: we merely intend here to give further examples of how those principles have been applied in the field of printed matter.
The four possible liability situations
Introduction
There are four possible outcomes if printed matter is supplied with other articles.
- The standard-rated article may be an ancillary part of the supply of zero-rated printed matter. The whole supply is thus zero-rated.
- The zero-rated printed matter may be an ancillary part of the supply of the standard-rated article. The whole supply is thus standard-rated.
- There may be a multiple supply, where two or more articles are distinct and independent. Here, if the articles are sold for a single price, apportionment will be necessary where the articles are liable to different rates of VAT.
- There may be a single, composite supply, where there are no principal elements of the supply but all elements are integral to one another. The supply will be liable to a single rate of VAT.
Supplies where the standard-rated article is an integral part of the zero-rated printed matter
We find in practice that most of these supplies are covered by Item 6 of Group 3, which gives relief to incidental items such as covers, cases, and other similar articles supplied with zero-rated printed matter and not separately accounted for. Further details of Item 6 may be found in VBOOKS3900.
Supplies where the zero-rated printed matter is an integral part of a standard-rated supply
An obvious example of this is where a washing machine manufacturer issues an instruction booklet with each new machine sold. The customer is paying for the washing machine and the whole supply is thus standard-rated.
Distinguishing between multiple and single supplies
You will probably find that the most difficult problem is to distinguish between multiple supplies and single supplies. Sometimes it is easy to identify a multiple supply: common examples are books issued with films or tapes, and children’s colouring books issued with felt-tip pens. It is quite possible to use the film or tape independently of the book, and indeed they need separate equipment to use them. Similarly, a child can use a felt-tip pen on any paper of its choice - it is sold with a colouring book as a marketing device.
However, one area which has caused problems is children’s activity packs. These may contain zero-rated books or booklets as well as standard-rated jigsaw puzzles or toys. You will need to decide whether the omission of any one component part would diminish the pack as a whole. We cannot give overall guidelines on these activity packs as each one is different, and must be judged on its merits. However, for general guidance on single and multiple supplies you may find it helpful to consult VATSC - Supply and consideration. This gives details of several tribunal decisions which have distinguished between single and multiple supplies.
When you have decided whether your supply is single or multiple, there are two possible liability consequences.
- If you decide that there is a multiple supply, an apportionment must be made to reflect the zero and standard-rated elements.
- If you decide that there is a single supply, the result will almost inevitably be that the whole supply is standard-rated. This is because Group 3 is drafted on the basis of physical entities, and leaves little leeway for any combination of those entities. Thus, for example, if you were satisfied that a pack containing a jigsaw puzzle and two booklets was a single supply, that pack could not itself be a booklet, and so would not be eligible for relief.
Tribunal cases
The following Tribunal cases concerned the distinction between multiple and single supplies, and involved articles of printed matter.
Emery DJ (MAN/75/2) (VTD 187) considered a variety of items, but apportionment was only allowed where a zero-rated pamphlet was supplied with a standard-rated box of rock specimens. In this instance, the two items were capable of physical separation, and were sometimes sold separately. In the other cases this did not apply, and the Tribunal ruled that there was one standard-rated supply.
In Milk Marketing Board (LON/87/495) (VTD 3389), a commemorative coin issued in a presentation folder was considered. The Tribunal ruled that this was a composite supply, and that as it did not fall within any of the articles mentioned in Group 3, the whole supply must be standard-rated.
In contrast, in Betty Foster Fashion Sewing Ltd [1976] VATTR 229, a dress making course packaged in a stiff paper folder was ruled to be not only one supply, but also zero-rated as a brochure. It is easy to see why the Tribunal saw the dress making course as one supply. However, to view that supply as a brochure was very much an exceptional decision, and we would seek to resist its application to any other cases.
In Odhams Leisure Group Limited - which went as far as the High Court [1992] STC 332 - a Postman Pat Activity Pack was ruled to be a single, composite supply. However, here the Tribunal distinguished this from the above case by ruling that this collection of items in a Polythene envelope could not be said to be a brochure in the ordinary meaning of the word. The whole supply was thus standard-rated.