Vat exemption?

Forum Categories › GENERAL VAT DISCUSSIONS › Vat exemption?

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  • 10 September 2020 at 22:03 #55663
    Sara
    Member

    We are setting a business selling loose tea which I believe should be VAT exempt, anyone can confirm this? And if we want to sell a set that includes the tea and other other accessories such as cups, tea pot, spoons in a box, how should we calculate the VAT we have to charge on the final product?
    Thanks 

    11 September 2020 at 10:11 #56033
    VAT-adviser
    Member

    All varieties of leaf tea, powdered instant tea, and tea bags are zero rated items. 

    If you are selling a tea with other items that are standard rated then it becomes a mixed supply and you need to assess: 

    1. What is the main supply and whether the rest of the items sold are ‘incidental’ items, which can be ignored. In this case the VAT rate of the products will be based on the main supply.

    2. If the customer clearly expects to receive both items in return for their payment, each subject to different rates of VAT, the VAT tax must be apportioned/charged separately.

    21 September 2020 at 08:12 #56034
    Sara
    Member

    Thank you for your reply. In our case the customer expects to receive both items so it falls on no.2 This means we charge for VAT on the total price of the set including tea or only on what would be 20% rate if purchased separately?

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