Calculating VAT Rate on a mixed supply

The HMRC Notice that covers this is Notice 701/10 - Section 6.

1. The packaging for the novelty/component will follow the rate of the novelty/component (likely std rtd). It doesn't matter whether cardboard or metal - that only matters under the packaging test where the overall package consists of different paper or card based items and is usually used where you are sending out something like an annual shareholder report which is zero rated and then a load of proxy voting forms which are usually std rtd and the test is then used to determine the whole package - but not really the case here for you.

2. Technically, yes - but in practice if the components are more than the book now, any price rise would still mean the ratio is leaning towards std rtd. I suppose if component prices fell below that of the book, then it may be beneficial to do the calculation again.

3. Not sure the question. Design costs?. But the design costs will not factor into the overall supply that you are making I wouldn't have thought. For example, you incur all sorts of overheads - legals, electric, gas and do not factor these into your final book price (directly at least), so in that respect, I can't see why you'd have to factor design costs in - it is simply another cost to the business.

If book costs £1.00 and novelty costs £1.00 then output tax is potentially due on the £1.00 novelty item so should be factored into your overall pricing.

Well, hopefully that'll get you started - you may already know that this is a fairly grey area with each scenario having to be judged on the individual facts in order to arrive at a reasonably accurate outcome.

Understand now.

If you see the tin as the packaging of the items, then those items (wand, rope, etc) will all be standard rated anyway and so the tin would follow the overall contents (ie, standard).

If you see the tin as just a tin (and indeed, a component in its own right - perhaps to hide a 'severed' finger in, or part of another magic trick maybe) then the tin is standard rated in itself like the rest of the components - if you know what I mean.

If it was cardboard, it is still just a box, not printed matter - which is ultimately what the zero rating is all about.

Sorry Andy - I supposed I should have asked you to be specific in the first place, my fault. Us VAT folk are slow, but like British Rail before us, we do get there!.

The book will be zero-rated, all the other (magic) items will be standard-rated, as will the tin/box the whole thing comes in.

Sorry to just jump in on this one at the end, but I am now slightly confused! I have always worked out multiple component products so the packaging takes the components combined rate rather than a definate 17.5 or zero.

Simple EG:

Book £1
Full Vat Component £2
Packaging £1

VAT rate = 11.67% (2/3 full rate)
Packaging takes this 11.67% rate.

Please can you advise me as to whether I am doing this right?

Many thanks!