Q:
I have a quick VAT question….. Im a graphic designer and buy print for my clients. Some print items are zero rated… the question is when I invoice the print cost plus a mark up on to my client I keep the print cost as 0% and any other costs (Design etc) at the normal 17.5%.
Am I doing the right thing or should everything I invoice be at 17.5% regardless of whether I have been charged 0% for the print from my printer?
Thanks
Lee
A:
Hi, sorry for the delay in replying, I’m just catching up on stuff after a family bereavement last month.
In principle if you are simply buying and selling printed material of any kind, the purchase and sale will be zero-rated. The rules about what qualifies are here in VAT Notice 701/10 http://tinyurl.com/344mkyr. The general principle is that if you sell on items which are zero-rated in their own right – say a leaflet, brochure, magazine or book – then your supply is zero-rated.
Where it can get a bit complicated for designers is if you are charging clients for designing stuff rather than for the production of the finished zero-rated item. The VAT liability depends on what the exact terms of the contract, but what often happens is that designers will contract for a “design and produce” type of supply so that you design the look, the cover etc of say a brochure then you subcontract the actual printing of the finished item to a printer. If you make a separate charge for the design service of the original proof, this would be standard rated. However if the printer is supplying you with a number of finished brochures which you then sell on to your customer, then in principle this would be an onward supply of printed material which should be zero-rated.
There’s some guidance on this issue in section 7 of the VAT notice. It’s worth reading through the notice as a whole as you’ll probably find that your situation is covered there – it’s not very long and quite easy to read.
Marie