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Where Taxpayers and Advisers Meet

VAT on mixed clothing lots?

she26
Posts: 2
Joined: Wed Oct 10, 2018 8:52 am

VAT on mixed clothing lots?

Postby she26 » Wed Oct 10, 2018 8:58 am

We sell mixed Lots of branded clothing. The items are sealed on pallets and could include babies, children and adult clothing.
We have been charging VAT on the Lot as a whole, but a purchaser has now queried this VAT charge as some of the items within the sealed Lots are zero-rated.
Please can someone advise what is correct?

les35
Posts: 528
Joined: Wed Aug 06, 2008 3:09 pm

Re: VAT on mixed clothing lots?

Postby les35 » Wed Oct 10, 2018 8:00 pm

Is the clothing sold (1) as unsuitable for wearing? (2)Or simply mixed adult and children's clothing?
In my view:
1 - standard rated
2 - agree a method of apportionment

she26
Posts: 2
Joined: Wed Oct 10, 2018 8:52 am

Re: VAT on mixed clothing lots?

Postby she26 » Thu Oct 11, 2018 11:27 am

Hi les35
It's new, end-of-range, branded clothes - just all added to a pallet randomly so we have no idea how much is adults and how much non-VATable.
We've always erred on the side of caution & charged VAT on it all - just wondered if there was any HMRC guidance on such situations?

AdamS93
Posts: 185
Joined: Tue Sep 26, 2017 6:28 pm

Re: VAT on mixed clothing lots?

Postby AdamS93 » Thu Oct 11, 2018 2:03 pm

I would argue that what you are selling is a 'single supply' for VAT purposes so what you are doing is correct.

What your customer is trying to say is that you are making multiple supplies of clothes and therefore you should itemise the items and charge the prevailing rate of VAT but I would disagree with this as you say each pallet is random - the next person may argue differently however.

les35
Posts: 528
Joined: Wed Aug 06, 2008 3:09 pm

Re: VAT on mixed clothing lots?

Postby les35 » Fri Oct 12, 2018 4:16 pm

From your description I think you are making a supply which is capable of apportionment. HMRC guidance is not easy to follow. This is the link: https://www.gov.uk/hmrc-internal-manuals/vat-supply-and-consideration/vatsc80000
If you agree with the principle that you are making a supply which is capable of apportionment, the method of apportionment is a separate question.

If you argue that the supply is a single supply of mixed clothing, and therefore standard rated, then that is much easier of course.

I think both options are reasonable, and you could make a justifiable case for each.
So, you could:
1. write to HMRC for a response. Whether their response will be helpful to you is uncertain.
or
2. seek a professional option (fee payable of course). But you would then show that to the other party, to give them some reassurance.


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