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HMRC internal manual

VAT Valuation Manual

Specific applications: business gifts and samples: samples

HMRC will apply the definition of ‘samples’ given by the ECJ in the case of EMI(C-581/08) as ‘a specimen of a product which is intended to promote the sales of that product and which allows the characteristics and qualities of that product to be assessed without resulting in final consumption, other than where final consumption is inherent in such promotional transactions’.

Examples that would not qualify as samples:

  • a finished item taken from a discontinued line. Although intended to demonstrate the type and standard of a particular range, it could not promote sales of that product line since it was no longer available.
  • a product provided in quantities greater than necessary for its characteristics and qualities to be assessed. If a waiter in a restaurant pours a small glass of wine as a ‘taster’, this would qualify as a sample, but if the restaurant provides a regular customer with a bottle of wine, this would not meet the ‘samples’ criteria.
  • Providing clothes from your stock, to your staff, to wear at work, cannot be samples, as “potential” customers are not “testing” the products.

Where businesses provide samples (as defined above) of their products free of charge to individuals for marketing purposes, none of the samples are liable to VAT. For example, a bulk supply of small cans of drink by a manufacturer to a promotions company, who then distribute them to potential customers.