VAT on delivery on zero rated goods question

[jonrussell]

I have just started a catering company delivering fresh fruit and veg. Until now all of my clients have been within my own city so I have not charged any delivery. However on Monday I will be delivering to a client 20 miles away so I will be charging a delivery charge of £5. Would I have to charge VAT on this delivery charge? considering everything I sell is zero rated. Or would it be better to simply charge more for the overall order?

Jon

 

[Kevin Hall]

This is a vexed question. Broadly, the test here is whether your customer is making one purchase of "delivered goods" or two separate purchases of "goods" and "delivery". So if you think you are supplying "delivered food", the £5 delivery cost takes on the VAT-character of the (zero-rated) food.

Hope that helps a little?

 

[Maslins]

This guidance from HMRC explains (badly). I think in effect it means if you sell zero rated goods, the delivery is zero rated (as Kevin says)

 

[jonrussell]

Thank you for your responses chaps. I was having a look at the HMRC guidance yesterday Maslins and like you say it does explain it badly - i was more confused! I'll give them a ring on Monday and see if they can offer any further advice. But I do think it will come under "delivered food" category.