VAT on Catalogues: Tribunal Rules

Posted: 9th March 2011

If you supply catalogues to your customers you should consider the implications of a recent decision of the VAT Tribunal involving retailer Next.
Next has operated a policy of supplying catalogues to customers at a cost of £3.75, which has been added to the customer’s next bill (if they made a purchase) with a similar amount credited against delivery charges.
In Next’s view, this was a marketing strategy intended to show customers they were getting free delivery of the goods ordered. It reclaimed the VAT incurred on the production of the catalogues.
The VAT Tribunal found that the scheme was merely a way of distributing the brochures for free. As a result, the VAT claimed was not recoverable. As the cost to Next is reckoned to be more than £1 million a year, an appeal is inevitable.
If your business operates a similar scheme, you should ensure you take VAT advice soon.