VAT - Mixed Supplies Case

A recent case has reaffirmed the dangers for vendors of goods which have different VAT rates. If they

fall into the trap of supplying a range of goods at the zero-rate of VAT because the main supply is zero-rated, they could face hefty VAT assessments. The case involved a caravan supplier, who also supplied contents for the caravans and zero-rated these because caravans themselves are zero-rated for VAT under UK law. HMCR raised an assessment for the output tax not paid on the standard-rated items. The case was remitted to the EC's Advocate General for an opinion.

The Advocate General ruled that an exemption from standard-rating of an item applies only to that item and not ancillary items sold with it. In his opinion, this is the case unless 'the application of a separate rate of tax' would cause 'insurmountable difficulties'. While the European Court of Justice is not bound to follow the Advocate General’s opinion, it is highly likely that it will. 

 

 

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.
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