In Thorsteinn Gardarsson v HMRC [2019] TC7255, the First tier tribunal held that a day planner was a book and not stationery for VAT. The Upper Tribunal has found that there was an error of law, in the FTT's reasoning. The case is being remitted back to the FTT for another hearing.
Books (but not e-books) that are designed to be read or looked at are zero rated. Stationery is standard rated.
Thorsteinn Gardarsson were selling ‘The Action Day Planner'.
- It was described as a 'book' and sold as a time management tool.
- It has 115 pages of which the first 16 are text. This is followed by 52 dated double pages ruled with columns for each day of the week, and spaces for completion on goals, tasks and similar.
- The company claimed the product was a book and should be zero rated.
- HMRC said it was a diary and standard rated, raising assessments for VAT at the standard rate and penalties for failure to notify and inaccuracies.
The tribunal found that it was a book comprising of instructions with a template copied 52 times. If the template had appeared once for the purchaser to photocopy, there would be no argument that this was a book. The fact that the trader had provided those copies did not stop it from being a book.
It allowed the appeal ordering the assessments and penalties to be withdrawn.
Comment
The distinction between zero rated books and standard-rated stationery has been made based on what the main point of the product is.
The approach in this case was that “where a product has the characteristics of two statutory categories..., then it should be placed in that category for which it has sufficient characteristics to qualify” and the tribunal found that this was the book category.
As noted above, on appeal the UT did not agree with the FTT's reasoning and the case is being remitted back to the FTT.
Links to our guides:
Books and printed matter
How are books and printed matter treated for VAT purposes?
Penalties (VAT)
When do penalties apply for VAT? What penalties are charged and how can they be mitigated?
External links:
Thorsteinn Gardarsson v HMRC [2019] TC 7255
VAT notice 701/10 on books and printed matter
