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HMRC internal manual

VAT Books

Books: Printed matter supplied with service: Printed matter sold with marketing services

Introduction

This is a contentious area of VAT. In short, when determining the VAT treatment of these type of supplies, much will depend on the facts of the case. It may be helpful to examine contractual agreements between traders offering marketing services and the bodies that they make their supplies to. However contracts are not conclusive in themselves and one must primarily consider the objective nature of the supply.

The VAT treatment of printed matter when sold with marketing services has been considered by a number of court cases, as outlined below.

Court judgements and tribunal rulings

The leading authority in this area is the High Court judgement in Appleby Bowers ([2001] STC 185). J Neuberger overturned the tribunal’s decision that the trader was making a single supply of promotional services, and found that instead the trader made a multiple supply of zero-rated brochures and standard rated promotional services. The judgement is largely restricted to the facts of the case, although in summarising the court stated:

Of course there are many circumstances in which a company that provides promotional services will also help with the design of brochures and other documents produced by a client. However, where, as here, those brochures contain in the main, material which has nothing to do with promotion, but are concerned with the actual business carried on by the client - in this case, details of the terms of insurance - it seems to me that the provision and supply of the actual brochures would not be thought by a normal speaker of English to be an integral part, let alone a necessary part, of the provision of promotional services.

We formed the opinion from this that where printed material supplied with other services is related to the services offered then this would point towards a single supply.

In the tribunal of Direct Marketing Bureau (MAN/99/581) (VTD 16696) the trader supplied creative work, artwork and printing. HMRC ruled that the trader made a single supply of standard-rated advertising services. This ruling was overturned at tribunal, which concluded on the facts of the case that the trader made a multiple supply of standard-rated artwork and zero-rated printed matter. The tribunal considered that it would be artificial to lump the separate supplies together, as there was no requirement to supply the creative work, the artwork and the printing together.

Mail shots

The supply of mail shots to companies is increasingly common. Traders will often target customers to whom the mail shots are sent; this is achieved by the provision of marketing services.

The tribunal in the case of D L Marketing (Direct Link) Ltd (LON/2000/54) (VTD 17006) ruled that the trader provided a multiple supply of design work (standard-rated services) and a supply of goods (zero-rated mail packs): this was contrary to the HMRC view that the trader made a single supply of a marketing advertising service. The tribunal found as a fact that the contract for the two supplies was separate and that in some cases the trader provided design work without supplying the printing. Again this case is restricted to its own facts. However, perhaps the most significant finding of the tribunal was that the appellant was still entitled to zero rate its supply of mail shots despite sub-contracting the supply of printing to another trader.

When considering the VAT treatment of mail shots you will need to consult VBOOKS8000, which details the treatment of supplies comprising wholly of printed matter (the package test).