vat question

[Blush]

I am in the middle of registering online.So I can't ring the accountant I am going to use so I just need to ask one simple question where it asks

Do you expect the VAT on your purchases to regularly exceed the VAT on your taxable supplies

what do I out??
I have to get this sorted this evening.The vast majority of items I sell are zero rated so does this mean I put yes or have I misunderstood?

[David Griffiths]

I'd guess (without knowing anything about your business) that the answer will be "Yes".

You won't be charging VAT on most of your sales, so presumably won't be paying it on most of your purchases. However, there will be a reclaim of VAT on overheads such as stationery, motor expenses, accountancy fees etc, so you could well be getting repayments each quarter. Hence the "yes"

Edit: Doh! just seen the links in your sig. Zero rated children's clothes I presume!

[Blush]

Thank you! I am sure my accountant will keep me right but at least I can get the registration finished off now.:D

[Jaydee]

I agree with David.

But to the OP, I would suggest that you become conversant with HMRC notice 714 and the various sizes of garments that are considered to be children's.

I have had a nightmare, on behalf of a client, in getting a written ruling on the zero-rating of teen bras that my client wholesales.

The guidance states that they can be zero-rated up to and including size 34B (in section 4.2 of the notice).

So clearly 36C is standard rated and 32A is zero-rated - but what about 36A - is that deemed smaller? And what about 32C or 32D?

So far no written ruling has been forthcoming and the National helpline refers us back to the notice that I start the call by quoting!!

[Kevin Hall]

Thank you! I am sure my accountant will keep me right but at least I can get the registration finished off now.:D

In the event of error, you can always send in a letter to amend the application form.

[Jenni384]

So clearly 36C is standard rated and 32A is zero-rated - but what about 36A - is that deemed smaller? And what about 32C or 32D?

So far no written ruling has been forthcoming and the National helpline refers us back to the notice that I start the call by quoting!!

Ok I'll have a go....
The number represents the size of the ribcage. Therefore someone who's a 32 is quite slim, or is a young teen not fully adult-sized yet, someone who is a 38 is bigger.
The letter represents the size of the breasts in relation to the ribcage. So A is small, D is large.
Given that this is about teenage bras, and the idea is that if you're teenage your breasts aren't yet fully developed, I'd say the B is the benchmark. 36B should be fine to zero rate as should 38A. 32C or D I would say is standard rated - yes that's a little unfair on teens with larger breasts but a line has to be drawn somewhere I guess. Anything that's a 30 should be zero as I think there would be very few adults indeed who are a 30. Though I could be wrong! I doubt you can buy a 30D bra though...

It's an odd debate as a lot of teens have bra sizes in the C or Ds and a lot of adults have bra sizes in the A and Bs so its a little wierd.

I think my logic of the cup size as opposed to the ribcage size is reasonable. But then someone at HMRC would come along and say as they are teens their body is smaller thus the 34 should be a cut off (unfair against bigger teens though?) but then there are adults who are a 32 so that doesn't make sense...

This could go round and round in circles. Pick a size and stick to it, and be prepared to argue it with a VAT inspector :D

PS So should Ann Summers zero rate their 34B bras?! :rolleyes:

[Kevin Hall]

I agree with David.

But to the OP, I would suggest that you become conversant with HMRC notice 714 and the various sizes of garments that are considered to be children's.

I have had a nightmare, on behalf of a client, in getting a written ruling on the zero-rating of teen bras that my client wholesales.

The guidance states that they can be zero-rated up to and including size 34B (in section 4.2 of the notice).

So clearly 36C is standard rated and 32A is zero-rated - but what about 36A - is that deemed smaller? And what about 32C or 32D?

So far no written ruling has been forthcoming and the National helpline refers us back to the notice that I start the call by quoting!!

Without claiming any special knowledge in this area, HMRC's test seems fairly standard.

If you look at Section 4.2.2 of VAT Notice 714 (for example), HMRC give the maximum girl's chest measurement for clothing generally as 33.5 inches. It seems that the same logic has been applied to the largest girl's bra (rounded up to 34 inches).

The cup-size is a separate measurement from the chest size, so I would assume this is a separate test to qualify for zero-rating, and that B is the maximum cup-size.

So, if the above analysis is correct, I would assume that any B-cup (or smaller) up to 34 inches passes HMRC's test. But presumably any C-cup (or larger) would usually be standard-rated, no matter what the chest-size. In other words, to use your own examples, a 36A bra would exceed the chest-size maximum and a 32C bra would exceed the cup-size maximum. But I agree, it is not crystal clear from HMRC.

However, do note that these maximum girl's sizes are only guidelines from HMRC and the "zero-rating" size-limits can be overruled given other circumstances. For example, Section 5 of VAT Notice 714 says that it matters how you sell the clothing. Section 5.2 would probably rule out zero-rating 34B bras in Anne Summers (sorry Jenni):

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&propertyType=document&columns=1&id=HMCE_CL_000138#P316_13595

Conversely, HMRC also acknowledge that some garments which exceed their guidlines sizes might be appropriate exclusively for girls/boys. Section 4.2.1 of VAT Notice 714 states this and Section 6 (Brownies uniforms) exemplifies this principle. It is hard for me to imagine a case where are bra larger than 34 inches or with a cup-size greater than B would be appropriate only for a girl and not for a (smaller) adult woman - but then again, I do not claim expertise in this area ...

Hope the analysis helps?

[Jenni384]

Hope the analysis helps?

It's VAT innit.... I don't specialise in it for precisely that reason!
Your explanation makes sense, thanks :)

For the record, I don't buy stuff from Ann Summers - used to work for them, don't rate their products that much, would rather shop elsewhere :p

[winelight]

It is hard for me to imagine a case where are bra larger than 34 inches or with a cup-size greater than B would be appropriate only for a girl and not for a (smaller) adult woman

Because they are decorated with pictures of Dora the Explorer?

And as you say, it's also how they're offered for sale - so perhaps if they were in Adams and not M&S?

[Barnie]

pfft i still paid full rate vat on my spiderman boxers the other day

[Blush]

how did it get round to mens underwear!:eek:
Thanks for all your help though.