Readers’ forum: VAT problem with output tax apportionment method

One of my clients sells goods to private individuals online. For one particular deal they sell a single package of a pen and a book for £12 including VAT. This is a mixed supply for VAT purposes – a zero-rated book and standard-rated pen – and they treat £4 of each sale as standard rated because the book is sold individually for £8.

However the client has asked me whether this method might be challenged by HMRC because they also sell the pen individually for a single price of £9 including VAT. If output tax was apportioned by using both individual selling prices this means that 9/17 of each mixed supply would be VATable compared to 4/12 as declared by my client.

A colleague in the office said that there is no issue because the legislation at VATA 1994 s 19(4) gives the business the...