Charity Christmas cards and VAT

DemiDee

We are in the process of looking to print some charity Christmas cards, with all of the profits destined for the charity. Could anyone here tell me if the printer is obliged to charge VAT in such a case? Many thanks in advance!

themull1

Why wouldn't he charge VAT? He's not a charity!

DemiDee

We'd heard that in some cases, certain printing work is exempt from VAT, for charities and non charities alike, so had assumed that Christmas cards might come under that exemption. He is not a charity, no, but there are still exemptions in certain cases, for particular products. Maybe my question might have been better worded had I simply asked whether there was such an exemption on the printing of Christmas cards regardless of whether they are destined for charity or business, but I'd wanted to cover all ground.

Savvy_Sue

I think that Advertising was VAT free for charities. However I have a niggle that that's no longer the case: I think I remember having to pay it on the last job advert I actually paid for. And I don't know whether Christmas cards would count as advertising.

If we don't get a better answer than mine, I'll swing this over to the Cutting Tax board, we have some VAT experts hanging out there.

gingerdad

Vat and printing is a very grey area. Certain marketing print is vat free. But I don't think that includes Christmas cards.

JasonLVC

Printed matter in general is zero rated when the end product has text/pictures covering at least 75% of the product. if the document has more than 25% of 'space' then it is not printed matter for zero rating purposes.

So a leaflet, pamphlet or magazine will have almost all words/pictures with very little space for the reader to write their own words in. This is why exercise books/diaries are VATable as they are mostly blank pages. This is also why when you have a leaflet with a tear off strip, it is usually a very small strip to keep within the 25% rule.

Charities can avail themselves of these zero rating rules. But a greeting card would fall outside of the general zero rating rule becuase it has areas for user completion (ie, the bit where you write your messages, etc) and your average greeting card has fours sides (front, inside front, inside back, back) of which both insides are mainly blank so fails the 25% area test).

Charities also have an additional relief that applies to advertising of the charity or of fund raising events. However, the charity logo on the back of the card is not sufficient for it to be deemed to be advertising of the charity or of a fund raising event.

The reason this is not seen as advertising is the zero rate applies where a charity buys in the services of "advertising space" from someone else such as a newspaper or magazine, but where the charity is promoting itself using its own medium such as its own website or its own cards, then this is not a supply of advertising from the printer to the charity, it is a supply of advertising from the charity to itself/the person who buys the card.

In other words, the printer is not selling the charity an "advertising slot", it is simply supplying greeting cards and those cards are mainly blank with the charity logo on the back and so cannot be zero rated. If the charity placed an advert in a newspaper advertising they are selling cards then that advert would qualify! I hope you can see the subtle difference. The card is not an advert when it is printed, it is only an advert to whoever buys the cards.

See also two HMRC notices if you need to convince people :-
http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000102&propertyType=document
and
http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageExcise_ShowContent&id=HMCE_CL_000123&propertyType=document

DemiDee

Jason, thank you so much for taking the time and trouble to write such a comprehensive and invaluable reply! I am very grateful indeed for your thorough input and advice on this matter, and I feel sure that your post will not only help myself, but many others who subsequently come here looking for similar advice, especially as the Christmas season approaches. Now I understand why cards would not be considered advertising as such, and have learned a lot more besides, which will benefit us in the future.

JasonLVC

Savvy_Sue wrote: »

I think that Advertising was VAT free for charities. However I have a niggle that that's no longer the case: I think I remember having to pay it on the last job advert I actually paid for. And I don't know whether Christmas cards would count as advertising.

If we don't get a better answer than mine, I'll swing this over to the Cutting Tax board, we have some VAT experts hanging out there.

VAT experts hang out here too!;)

The old advertising rules was that the advert in the newspaper or on the radio had to be an advert "promoting the causes of the charity", so an advert recruiting for a job at the charity would not be zero rated.

However, that rule was changed quite a few years ago now and so any advert placed by a charity, provided it clearly shows or mentions the charities name, can qualify for the zero rating, so a job advert can be zero rated as well as fund raising appeals, advert for the charity shop or whatever. Adverts can be in printed media, radio, TV or internet.

JasonLVC

DemiDee wrote: »

Jason, thank you so much for taking the time and trouble to write such a comprehensive and invaluable reply! I am very grateful indeed for your thorough input and advice on this matter, and I feel sure that your post will not only help myself, but many others who subsequently come here looking for similar advice, especially as the Christmas season approaches. Now I understand why cards would not be considered advertising as such, and have learned a lot more besides, which will benefit us in the future.

Your most welcome DemiDee, thank you for your kind feedback.

Savvy_Sue

JasonLVC wrote: »

VAT experts hang out here too!;)

I thought you might, but didn't want to presume on how often! :rotfl:

Very comprehensive and almost comprehensible replies, although as always with the detail of VAT one's eyes start to glaze! :rotfl: