Readers’ forum: Can different apportionment methods be applied?

One of my clients manufactures goods – let’s call them product A and product B – and sells them on its website to private individuals either separately or as a single package. In other words customers can buy a single package for a single price that includes both A and B or – alternatively – just buy A or B on their own.

The issue that has arisen is that A and B have different VAT liabilities – A is zero rated and B is standard rated – and my client has always apportioned output tax on the mixed packages according to the total costs incurred in making each item. However she has now realised that an alternative apportionment method based on the retail price of each item when sold on a stand-alone basis produces a lower output tax liability on each sale.

I am comfortable about using...