Removal of linked goods concession
Published 8 January 2026
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This publication is available at https://www.gov.uk/government/publications/revenue-and-customs-brief-1-2026-removal-of-linked-goods-concession/removal-of-linked-goods-concession
Purpose of this brief
This brief confirms that the Extra Statutory Concession (ESC) described in paragraph 3.7 of Notice 48 is no longer needed, HMRC considers that the supplies previously eligible to be treated as single supplies under the concession should be treated as single supplies under the legislation, as confirmed by existing case law. The concession will be withdrawn. Businesses should now refer to HMRC’s policy as described in VATSC11113 - Supply: Single and multiple supplies: HMRC’s approach: The general approach.
Who should read this brief
Businesses providing either goods or services where minor articles are linked to the main supply and sold at a single price.
Background
The House of Lords decision in R v Commissioners of Inland Revenue (Respondents) ex parte Wilkinson (FC) (Appellant) clarified the scope of HMRC’s administrative discretion to make concessions that depart from the statutory position. Whilst some concessions went beyond the scope of HMRC’s discretion, the linked goods concession was found to be compliant with the principles set out in Wilkinson.
It is being withdrawn now as it already falls within established case law.
HMRC policy in relation to supplies of linked goods or services
The starting point for determining the VAT treatment of any supply is to assess whether it is a single or mixed supply (that is supplies at different VAT rates for a single consideration). Guidance on this can be found in the VATSC11112- Supply: Single and multiple supplies: HMRC’s approach: Why is it important to distinguish between single and multiple supplies?
HMRC has not changed its policy on single and multiple supplies. Businesses should continue to apply the tests set out in the VATSC11113 - Supply: Single and multiple supplies: HMRC’s approach: The general approach, when making this assessment.
Applying these principles will lead to the same outcome as applying the revoked concession in cases where the concession would previously have applied. HMRC considers that supplies which would previously have been eligible for treatment as single supplies under the concession should continue to be treated as single supplies under case law. The withdrawal of the concession is not intended to introduce new compliance obligations or change the VAT treatment of such supplies.
As before, HMRC will treat most small value supplies, which might otherwise be considered distinct and independent, as forming part of a single supply. This applies either where the:
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item is ancillary to the main supply, and therefore a better way of enjoying a principal supply; or
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supply is so closely linked as to form, from an objective point of view, a single indivisible economic supply which it would be artificial to split.
Whether a supply falls as a single supply will depend on the specific facts of each case.
Where there is a mixed supply, businesses will need to apportion the consideration using the VAT legislation in section 19(4) of the VAT Act 1994. Further guidance is available in VATVAL03700 - Apportionment of monetary consideration: methods of apportionment – general.
Guidance
Guidance on this matter can still be found in the VAT Supply and Consideration manual.