We all know that the VAT rules throw up some oddities which are mainly the result of new products, technology and the way people live their lives now. I do think that the law needs a significant, consistent overhaul rather than a piecemeal approach, but let’s just consider some of the weird results the present system throws up. This is a MOSS* for all tabloid journalists….
* Mini One-Stop Shop
An odd rule applies to gingerbread men. No VAT is charged if the figure has two chocolate spots for its eyes, but any chocolate-based additions, such as buttons or a belt, mean VAT is payable.
The sale of a horse is standard rated. However, the sale of a dead one (for horse meat) is zero rated. I wouldn’t really want to dwell on the VAT planning aspects of this…
A downloaded purchase of the bible is standard rated while “saucy” top shelf magazines are VAT free.
So that’s what it’s called….. From HMRC guidance – “For the purposes of establishing the place of supply of services, stallion nominations (The right to nominate a mare to be covered by a stallion in one breeding season) and the covering of mares is treated as ‘work carried out on goods’”.
Food for wild birds is zero rated while food for caged birds is at 20%.
Well, what do you know?! Jaffa cakes are cakes, Pringles are crisps and now Lucozade Sport is a beverage. That’s what the Upper Tribunal has just ruled, so the drink is now subject to VAT. So now we know.
(And since this is VAT, we have to mention Jaffa cakes – again!) It was ruled as a fact that cakes go hard when stale whereas biscuits go soft.
Food that is too hot to eat can be classed as cold food for VAT purposes.
Orange juice is zero rated. Lemon juice is zero rated. Mix them, and you have a standard rated product.
Peanuts in shells are zero rated, salted peanuts are standard rated.
If your shop is burgled, it’s best to let the robbers take your stock. Goods lost to theft are not subject to VAT, but if cash (which customers have paid for goods) is taken from the till a VATable supply has still been made and VAT is due on it.
The sales of kangaroos are standard-rated but kangaroo steaks are zero-rated.
Rabbits are zero-rated, even if sold as pets. Sales of pets are standard rated.
The sales of counterfeit (illegal) goods are subject to 20% VAT, but the sale of counterfeit banknotes are not.
There was a planning scheme called the golden toothbrush, but it didn’t matter what colour the toothbrush was.
Ferret food has recently been ruled to be subject to 20% when it was VAT free from 1973.
Caviar is deemed a necessity in terms of VAT, while orange squash is a luxury item.
Buying a coffin is standard-rated but hiring a hearse is VAT free.
Children’s clothing with rabbit and gazelle fur (and even dog skin) is zero-rated but if it has Tibetan goat fur it is subject to VAT.
Tuition provided by a sole practitioner is exempt, but if the tutor incorporates then their supplies become standard-rated.
In the Spearmint Rhino case it was ruled that there is no VAT on lap dances.
Under some VAT schemes, zero rated and exempt supplies are subject to VAT (and even some which are “Outside the scope of UK VAT”).
Dog food for a poodle is subject to VAT but exactly the same food can be zero rated if it is for a Labrador.