It was hoped that the updates to VAT Notices 700/24 and 701/10 would bring some much needed clarity to the direct marketing industry and allow everyone to move forward on an even footing.
The revised version of VAT Notice 700/24 advises that:
‘Where..(marketing related services) are supplied with printed matter as a single supply, then that is taxable at the standard rate, as it is a supply of direct marketing services. Where the printed matter and any services are supplied separately then that may comprise multiple supplies and each component is taxed according to its VAT liability.’
This guidance infers that print supplied with marketing services can be EITHER a single or multiple supply depending on the individual facts in each case. Since 1 August 2015 many firms have relied on this guidance to continue to supply print and other services, treating them as multiple supplies for VAT purposes. In practice, it would appear that HMRC’s Compliance Team is taking the default position to categorise these as a ‘single supply’ and that contrary to the guidance quoted above, HMRC will not readily accept the supply of print and other services can be a multiple supply.
This matter is of concern to us all because it is likely that industry suppliers are succumbing to HMRC pressure and, for supplies made since 1 August 2015, charging VAT on both the print and other services.
HMRC should use the facts in each case to decide whether a single or multiple supply exists. The start point for such matters should be to identify the customer’s expectation. In the customer’s mind were they receiving a single over-arching supply of marketing services or separate component parts. Often the contract or brief will be a pointer to the customer’s expectation.
HMRC advise that the following list of indicators suggest that a transaction is a multiple supply (though do not provide conclusive proof)
• Separate pricing or invoicing
• Components are available separately
• There is a time differential between parts of the supply
• Components are not interdependent/connected
We, industry bodies, and other taxation professionals continue to lobby HMRC about these matters. If you are in any doubt if your supplies are affected you should seek professional advice.
