Commentary

RCB/51/10 VAT — change in treatment of business samples

Part V16 Forms and other HMRC material

RCB/51/10 VAT — change in treatment of business samples

RCB/51/10 VAT — change in treatment of business samples

Revenue & Customs Brief, Issue 51. 9 December 2010

This Brief is relevant to VAT registered businesses that give away samples of their products.

The UK's restriction of allowing only one sample to be supplied to one person free of VAT has been removed. This follows the decision of the European Court of Justice (ECJ), in the case of EMI (C-581/08) on 30 September 2010.

Businesses can make a claim to HM Revenue & Customs (HMRC) for VAT incorrectly accounted for on supplies of samples. This Brief provides details of how to do so.

Background

Both EU and UK legislation require that, when goods on which input tax has been reclaimed are disposed of for no consideration, VAT normally becomes due. However, this does not apply to “gifts of small value” and “samples”, which in the UK under VATA 1994 are defined as follows:

  1.  

    —     a limit of £50 – valued at cost – is applied to “small gifts”. This applies to either a single gift

  2.  

    —     or a cumulative series of gifts, to the same person in a 12-month period

  3.  

    —     only one sample of each product supplied to another person is to be disregarded.

Gifts of small value

The ECJ agreed that the UK does

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