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HMRC’s revised guidance for sales of goods ‘on approval’.
HMRC has revised its guidance on mail order supplies to make clear that sales of goods ‘on approval’ to which a delayed tax point applies will be made only in specific circumstances, dependent on the facts in each case.
Delivery charges for on-approval goods are always treated as a separate, standard-rated supply. This is because goods sent this way allow the customer to inspect them before deciding whether to buy them. The supply of the delivery service does not therefore depend on the supply of the goods. This differs from other mail order supplies, for which VAT on the delivery charge follows that of the goods.
Businesses have three months from 18 June to ensure they are accounting for VAT correctly on these supplies.
HMRC will not require correction of past returns for time-of-supply discrepancies highlighted by this guidance.
For details, see Revenue and Customs Brief 5/2018: VAT liability of goods supplied on approval.
