BB/2/99 Opticians—spectacle sales apportionments
Business Brief, Issue 2. 13 January 1999
This Business Brief sets out Customs' policy regarding the principles of apportionment to be applied to the income received by opticians for sales of spectacles and dispensing services.
In 1995, the High Court ruled that payment for a supply of spectacles constituted consideration for separate supplies of standard-rated spectacles and exempt dispensing services. A single charge for separate supplies is required to be apportioned so that the amounts properly attributable to each supply can be identified. Customs reached agreement with the opticians' trade bodies upon a number of apportionment methods. These were intended to be a short-term measure to allow repayments to be calculated easily and to allow time for opticians to organise their accounts and records so that more accurate apportionment methods could be adopted in the future.
Customs and Excise's VAT Information Sheet 3/97 [Division V16.5] announced that the centrally agreed methods were to be withdrawn with effect from 1 January 1998. Opticians were required to agree individual methods with their local VAT business advice centres. Information Sheet 3/97 contained a suggested apportionment method based upon costs (“full costs method”) that could be used as a basis for the apportionment.
It also stated that, if the optician and Customs could not agree a method, the optician should separate the supplies at the point of sale. A later Information Sheet (10/98) [Division V16.5] gave further technical advice on how to operate the “full costs method”.
Since 1 January 1998, various apportionment methods have