The 12 days of Christmas – VAT edition

Have you ever wondered how VAT comes into play during the 12 days of Christmas carol?

We have given the classic 12 days of Christmas carol a VAT twist, from VAT thresholds to reverse charge rules, we’ve wrapped up 12 key insights to help make your VAT journey a little merrier.

On the first day of Christmas
My true love gave to me
A partridge in a pear tree

Pear Tree

All crops that are specifically grown to produce food of a kind for human consumption or animal feeding stuffs are zero-rated.

Partridge

Most breeds of chicken are zero-rated, as are game birds and ostriches. Ornamental breeds of birds are standard-rated.

Mixed supply to apportion between zero-rated pear tree and standard rated ornamental, unless the partridge was to be sold as zero-rated food.

A partridge pie when served in a restaurant would be standard rated as supplies in the course of catering.

On the second day of Christmas
My true love gave to me
Two turtle doves …

Most breeds of chicken are zero-rated, as are game birds and ostriches. Ornamental breeds of birds are standard-rated.

Was this a BOGOF – VAT generally not deductible on the costs where goods are provided free of charge.

On the third day of Christmas
My true love gave to me
Three French hens …

Were they imported from France? Need to work out whether ornamental and standard rated, or if kept for their eggs, zero-rated.

On the fourth day of Christmas
My true love gave to me
Four calling birds …

Most breeds of chicken are zero-rated, as are game birds and ostriches. Ornamental breeds of birds are standard-rated.

If the ‘calling’ is considered to be telecoms, consideration to the domestic reverse charge may be required where this is a wholesale supply.

On the fifth day of Christmas
My true love gave to me
Five gold rings …

Antique rings could fall under the second-hand margin scheme but does not include items made from precious stones.

Consideration of the following:-

• Supplies of non-investment gold
• Zero-rated supplies of gold
• Margin scheme
• Imports and acquisitions
• Exports and Dispatches
• Sales to non VAT registered customers
• Antique items
• Gold scheme
• Accounting for output VAT

On the sixth day of Christmas
My true love gave to me
Six geese a laying …

Bird or and eggs?

HMRC have a list of the breeds (Yes they do!) of geese usually kept for meat or eggs for the zero-rating to apply.

On the seventh day of Christmas
My true love gave to me
Seven swans a swimming …

Swans are owned by the King so cannot sell!!!! Roast swan used to be a delicacy, although no longer and therefore cannot be zero-rated food.

On the eighth day of Christmas
My true love gave to me
Eight maids a milking …

Service or goods?

Milk and milk drinks are zero-rated, however flavorings for milk shakes would be standard rated.

Services would depend on who they are provided to, UK to UK standard rated, whereas supplies of services to non-UK customers would generally fall to be treated as outside the scope of UK VAT.

On the ninth day of Christmas
My true love gave to me
Nine ladies dancing …

Entertainment and place of supply depends on whether business to business (B2B) or business to consumer (B2C).

Admissions provided on a B2B basis are taxable where the performance takes place.

For B2C supplies the scope of supplies taxed where performed is far wider and includes services relating to cultural, artistic, sporting, scientific, educational, entertainment and similar activities. Therefore, may dictate a VAT registration in another jurisdiction.

On the tenth day of Christmas
My true love gave to me
Ten lords a leaping …

Where B2C services are provided in connection to cultural, artistic, sporting, scientific, educational, entertainment or similar activities these services will be taxable at the place where they are performed. This is not limited to the supply of admission.

On the eleventh day of Christmas
My true love gave to me
Eleven pipers piping …

Could these services fall under the cultural exemption unless they are likely to distort competition or provided by certain public bodies.