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Photo books will remain zero rated for VAT purposes, after HMRC confirmed they would not appeal the First-tier Tribunal decision in Harrier LLC (TC1562).
The taxpayer company provided bespoke volumes containing photographs taken by customers, and it claimed the products were zero rated because they fell within the definition of book.
The tribunal decided most of the items in question were indeed books, and dismissed the Revenue’s argument that a photo book was ancillary to a supply of services.
Two items were found not to be books because they consisted of spiral binding, and the pages had the quality and appearance of individual photographic prints.
In light of the decision, the taxman says a photo book will qualify for zero rating if it has as a minimum several pages, a cover stiffer than its pages, and is bound.
The product must also be designed to be read or at least ‘looked at’, say HMRC. It will not be zero rated if the pages have the appearance and quality of individual photographic prints, or if it can be dismantled without damaging the binding.
The Revenue claims the Harrier LLC decision does not affect supplies where there is a predominate supply of services, such as those where the customer is paying for and receiving photographic services that then result in the production of a book: for example, the provision of a wedding package consisting of professional photography and a book displaying selected photos.
In such a case, the photographic service is the dominant supply and the book is ancillary – and there would be a single supply of standard-rated services, according to the taxman.
