Books: Processes leading to the production of printed matter: Production
At some stage in every production process, goods are given the essential characteristics of a zero-rated article. This stage will vary according to the article which you are considering - the table in VBOOKS4100 gives some common examples.
You must correctly identify the stage at which zero-rated goods are produced for the following reasons.
- If a trader undertakes this stage of the production process, he may always zero-rate his supply. Thus, for example, a trader who takes the pages of a book which have already been printed, cut and collated, and binds them into a cover, has produced a book and may zero-rate his supply.
- If a person has a contract with this customer to supply zero-rated printed matter, we regard both the preparatory work and any post-production services as part of that supply. These stages may thus also be zero-rated.
When seeking to identify this stage, you need to adopt a flexible approach. For example, the majority of loose-leaf books are supplied with the intention that they be placed in ring-binders, and are hole-punched accordingly. However, there are some binders which attach the contents by other means which do not involve hole-punching. Here, the complete set of loose leaves assumes the essential characteristics at an earlier stage. Thus the person who cut and collated the entire set of loose leaves could zero-rate the supply in these limited circumstances.
The production of amendments, instalments and part works
Read in conjunction with VBOOKS3120.
Both amendments to complete ring-bound books and self-contained instalments of books are zero-rated. If your trader is involved in the production of either of these, you should consult the table at VBOOKS4100. You should first decide which of the listed printed matter articles your finished product will most closely resemble, and then identify the stage at which zero-rated goods are produced.
The production of the part works referred to in VBOOKS3120 is treated fundamentally differently. These part works do not form a self-contained instalment and thus cannot be zero-rated as books, booklets or brochures in their own right. We have made an extra-statutory concession to allow part works to be zero-rated, provided the completed work would itself be zero-rated as a book. However, this concession applies only to retail or mail order sales. The printer who produces these part works has not produced goods which are eligible for relief according to a strict interpretation of the law. He cannot therefore zero-rate his supply to the retailer or mail order house.
The Tribunal of Butler and Tanner  (VATTR 72) considered parts of a book at various stages of the production process - for example, a cover and a collection of printed sheets. Relief was not allowed for any of these component parts, as they had not been assembled into completed books.