Crosswords1 min ago
VAT on milk
9 Answers
I have had an email from my milkman regarding the VAT increase.
I thought that there was no VAT on food, so I don't understand why the VAT increase should affect doorstep milk deliveries. Does anyone know whether VAT is charged on milk deliveries?
Obviously the milkman can deliver other products - fruit juice, bread, eggs etc. - but these should all be VAT free too.
I thought that there was no VAT on food, so I don't understand why the VAT increase should affect doorstep milk deliveries. Does anyone know whether VAT is charged on milk deliveries?
Obviously the milkman can deliver other products - fruit juice, bread, eggs etc. - but these should all be VAT free too.
Answers
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Milk is zero rated for VAT. Reading the HMRC website, it says,
"Postage and delivery charges
HMRC Reference:Notice 700/24 (April 2003)
2.3 What if I have to deliver the goods and I make a charge for this?
The important test is whether delivery is included in the contract. You are making a single supply of delivered goods if, under the contract, you have to deliver the goods to a place specified by the customer. This might include the customer’s:
own address;
friends or relatives; or
their own customers.
The position is not affected by whether the charge you make for delivery is separately itemised or invoiced to the customer. In either case there is a single supply for which the VAT liability is based on the liability of the goods being delivered. >>>>>For example, any element of the price attributed to the doorstep delivery of milk and newspapers will also be zero rated. <<<<< On the other hand any element attributed to the delivery of standard rated mail order goods will be standard rated"
The way that reads to me, as the VAT-free milk is being delivered as part of the contract, no VAT can be charged on the delivery. You may want to query him with regards to the VAT he has charged you until now.
"Postage and delivery charges
HMRC Reference:Notice 700/24 (April 2003)
2.3 What if I have to deliver the goods and I make a charge for this?
The important test is whether delivery is included in the contract. You are making a single supply of delivered goods if, under the contract, you have to deliver the goods to a place specified by the customer. This might include the customer’s:
own address;
friends or relatives; or
their own customers.
The position is not affected by whether the charge you make for delivery is separately itemised or invoiced to the customer. In either case there is a single supply for which the VAT liability is based on the liability of the goods being delivered. >>>>>For example, any element of the price attributed to the doorstep delivery of milk and newspapers will also be zero rated. <<<<< On the other hand any element attributed to the delivery of standard rated mail order goods will be standard rated"
The way that reads to me, as the VAT-free milk is being delivered as part of the contract, no VAT can be charged on the delivery. You may want to query him with regards to the VAT he has charged you until now.
Factor has it right. The answer is that the milkman is delivering a service, so you are going to have to pay VAT on it. All services, whether they supply a zero-rated VAT product or not, have to charge VAT on them.
To what extent the service provider can separate the 'product' and the 'service' elements I do not know - you will have to ask the milkman that.
To what extent the service provider can separate the 'product' and the 'service' elements I do not know - you will have to ask the milkman that.
Well ORANGEANDPROUD and buildersmate directly contradict each other, but I don't think it makes any practical difference
The milkman's costs are going to go up - therefore he wants to put up his price. He doesn't have to be charging VAT to do that, just incurring costs which can (in part) be explained by VAT
The milkman's costs are going to go up - therefore he wants to put up his price. He doesn't have to be charging VAT to do that, just incurring costs which can (in part) be explained by VAT
The service in question is the delivery of milk and in the example given by HMRC, it clearly states the delivery of milk is zero rated. If the milkman has used an elemant of VAT as part of his price then he has overcharged. While it is correct to say he can increase his charge for whatever reason, he can not use the increase in VAT as an excuse. It would be interesting to know if his prices decreased when the VAT rate decreased.
OK, hand up, I admit I am wrong.
I researched this prior to you posting, O&P, then failed to read your own post properly.
There is nothing in HMRC VAT Notice 701/14 which covers food products are are zero-rated to state this, and nothing in HMRC stuff on Trade Sectors with special VAT rates either.
I failed to find VAT 700/24.
Milkmen do have to charge VAT on the delivery service of other products they supply that are not zero-rated.
I researched this prior to you posting, O&P, then failed to read your own post properly.
There is nothing in HMRC VAT Notice 701/14 which covers food products are are zero-rated to state this, and nothing in HMRC stuff on Trade Sectors with special VAT rates either.
I failed to find VAT 700/24.
Milkmen do have to charge VAT on the delivery service of other products they supply that are not zero-rated.
Is he actually charging VAT on milk delivery? That would of course be wrong.
However, if he isn't himself VAT registered (and most small milkmen wouldn't be) then the additional fuel costs etc are bound to mean increased costs for him that he cannot recover so his prices would inevitably have to go up to stay at the same levels of profit for him. That's presumably all he meant. Not that he himself is charging VAT.
However, if he isn't himself VAT registered (and most small milkmen wouldn't be) then the additional fuel costs etc are bound to mean increased costs for him that he cannot recover so his prices would inevitably have to go up to stay at the same levels of profit for him. That's presumably all he meant. Not that he himself is charging VAT.
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