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HMRC internal manual

VAT Valuation Manual

HM Revenue & Customs
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Specific applications: Services incidental to supplies of goods: general

Treatment of incidental charges relating to delivery, postage, packaging and the like depends upon whether or not delivery, postage and packaging constitute separate supplies from the goods and whether there is a single or separate charge. The position will normally be one of the following:

  • No separate supplies - there will be a single supply of goods, the value for VAT will be the total inclusive charge made in accordance with section 19(2) of the VATA 1994.
  • Separate supplies of goods, delivery/postage/packing for a single charge - unless each supply has the same liability, the total charge will need to be apportioned under the provisions of section 19(4) of the VATA 1994. This is fully covered in section 03000 of this guidance;
  • Separate supplies of goods, delivery/postage/packaging for separate charges - the separate charges will be the consideration for the individual supplies. The value for VAT will then depend upon each individual charge under the provisions of section 19(2) of the VATA 1994. This is fully covered in section 02000 of this guidance.

In the European Court of Justice decision, Plantiflor Limited (STC 137), it was confirmed that the charge for delivery by Plantiflor to their customers was not a disbursement for the exempt supply of postal services from the post office to Plantiflor, but was a standard rated supply of arranging for delivery services to their customers