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HMRC internal manual

VAT Books

Books: What kinds of article are eligible?: Leaflets (Item 1): Function

  • Their main function is not to convey information.

A number of articles fail this test - for example, all types of tickets, coupons, vouchers and labels. Similarly, fragrance samples must be standard-rated, as their main function is to be sniffed.

  • They are primarily intended for completion or detachment.

In Public Notice 701/10 Zero-rating of Books etc we say that if more than 25% of a leaflet is to be completed or detached, that leaflet has become a form and will not qualify for relief. This is an easy way for the trade to judge liability, but it has no basis in law and can produce an unfair result. Traders must be allowed to judge liability by the 25% rule, but if they feel this has produced an unfair result, you should consider each case on its merits. If the main significance of the article lies in the parts to be completed or detached, that article must be standard-rated - and articles which are returned whole after completion are always standard-rated.

Articles which do not meet the physical characteristics criteria in VBOOKS3320 may nonetheless occasionally qualify for zero rating on the basis of their function. For example, in Multiform Printing Limited [1996] (VATDR 580) it was decided that articles described as printed sheets made with fairly thick paper which droops down when held at the top, or at a corner, but less so when held at the edge on either side, were leaflets in ordinary English usage. The sheets were of A4 size and contained information and advertising material. One included a tear-off slip of less than 25% of the total area. Two reasons were given for the thickness of the paper, one to allow the mechanical insertion of the sheets in newspapers and the other for the tear-off slip to be stiff enough to satisfy post office requirements. The chairman commented: The references in the MCC case to ‘flimsy’ and in the Panini case to ‘limp’ have, I think, been unfortunate, and have led to questions of degrees of limpness which have not been helpful. There is no need for a leaflet to be flimsy. Limpness is an inexact word and often connotes the loss of a quality of springyness - what happens when paper becomes damp. What can be said with certainty is that leaflets must be in the nature of or have the qualities of paper - which of course comes in a variety of qualities and thicknesses. Its grammage can only be a pointer and not an absolute test.