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HMRC internal manual

VAT Books

Books: Processes leading to the production of printed matter: The role of sub-contractors


A printer with a contract to the final customer to supply zero-rated printed matter may zero-rate any preparatory work or post-production services, even if sub-contractors have been employed to perform some parts of the production process.

However, a sub-contractor can only zero-rate preparatory or post-production work when these are supplied in conjunction with zero-rated printed matter. For example, where a sub-contractor carries out typesetting only, his charge must be standard-rated; but if he goes on to produce zero-rated printed matter, he can zero-rate all of his charges to the main printer.

There will therefore be occasions when a sub-contractor will need to charge VAT for his contribution to the production process, although the main printer may zero-rate the same supply to the final customer. The following table provides an illustration of one such situation.

A possible situation illustrating VAT liability at different stages of the production process

### Supply ### VAT treatment
(ZR = zero-rated, SR = standard-rated)    
  1. Author produces the manuscript for a booklet & sells it to a publishing house. SR supply of preliminary services.
  Publishing house agrees to supply 10,000 complete booklets to the retailer, at an inclusive price of £30,000. Publishing house employs sub-contracting companies as follows.  
  2. Sub-contractor 1 type-sets manuscripts. SR supply of preparatory work.
  3. Sub-contractor 2 prints, cuts, collates & stitches together booklets. ZR supply. The act of stitching produces ZR goods. The printing, cutting & collating are supplied in conjunction with ZR printed matter & may also be ZR.
  4. Sub-contractor 3 packages books. SR supply of post-production service in isolation.
  5. Publishing house supplies complete booklets to retailer. Entire charge ZR as a supply of booklets.