You don't have to look very far to find odd anomalies in the VAT world. The recent case of News Corp and Ireland Ltd vs HMRC is close to home for me as a one-time book publisher turned online entrepreneur, and is full of the madness of the English legal system.
The issue is that print versions of newspapers are zero rated for VAT but the online editions are subject to VAT at 20%. This seems fairly silly, and indeed the judge spent a lot of time focusing on whether the content of the publications and the behaviour of the reader are the same in both cases.
Answer: They are.
Despite this, HMRC argued successfully that the current treatment was correct because it is what the law says. It seems the law hasn't been kept up to date to include such new-fangled inventions as the internet. It all came down to the fact that Item 2 Group 3 only zero rates the supply of "goods" not "services" and to be classed as a good, the item being sold must be tangible.
All this made me quite angry, so to regain my sense of fun I thought I would make a list of frankly silly VAT anomalies. Here goes:
VAT |
No VAT |
| Print Newspapers | Online newspapers |
| Strawberry and banana Nesquik | Chocolate Nesquik |
| Chocolate digestives | Jaffa cakes |
| Roasted peanuts | Peanuts (shelled but not roasted or salted) |
| Marshmallow teacakes | Snowballs (marshmallow dome with no cake) |
| Sweet tasting dried fruit (sold as confectionary) | Sweet tasting dried fruit (sold for home baking) |
| Drained or crystallised fruits | Drained cherries for use in home baking |
| Crisps | Twiglets, prawn crackers or tortilla chips |
| Toffee apple | Toffee apple on a stick |
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