VAT – “Simples”…or is it?

Jan. 9, 2017, 11:00am

We frequently receive VAT queries and our clients are often surprised when we answer ‘it depends’ and ask additional questions to establish a clear background to the query at hand.

Often our attempts to solicit additional information are met with, ‘but surely it is just one VAT rate or another?’

The correct VAT treatment is, more often than not, anything but straightforward. VAT has many pitfalls for the unwary…

Let us consider two (very contrived) examples below:

Image of childrens colouring booksChildrens’ Books

HMRC accept that colouring or dot-to-dot books are childrens’ picture and painting books and so are  zero-rated for VAT as ‘normal’ books. So far, so good, but what if a similar book is designed for an adult?

The High Court has held that, in order to be a book, a publication must be designed to be ‘read or looked at’. Adult colouring and dot-to-dot books are not designed to be read or looked at – they are designed to be completed. Therefore, these books cannot be zero-rated as normal books.

However, if a child’s dot-to-do book can be regarded as suitable for adults or held out for sale in retail shops together with other adult books that are unsuitable for children, then it no longer qualifies as a ‘normal’ book.


HMRC have issued Brief 17/2016 to confirm their policy in relation to the VAT liability of the above type of books, effective from 1 April 2017. Yes really!

What about a child’s hat?

In general, sales of childrens’ clothing are zero-rated. What if our child’s hat is made wholly or partly of fur?

The answer is that the VAT rate could change – articles of clothing made wholly or partly of ‘fur skin’ are excluded and are therefore standard rated.

Picture of blackrabbitWhat if our fur hat is made of rabbit skin – sorry, yes, a real little bugs bunny.

VAT legislation defines ‘Fur Skin’ as any skin with fur, hair or wool attached except, amongst other things, rabbit skin!

As such our child’s rabbit fur hat qualifies for zero-rating!

Got that?!

Clearly the above is an abridged and heavily summarised selection of the technical details in this area, but hopefully the point is clear – VAT is far from straightforward!

If you have a VAT query – contact us.

Oh, and do bear with us if we ask you for details!!

We Think. You Gain.

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