International Master Publishers Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 11 August 1992 |
| Date | 11 August 1992 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
AE Walker Ltd (1973) VATTR 8
Betterways Panels Ltd v C & E Commrs UNK[1964] 1 All ER 948
British Railways Board v C & E Commrs VAT(1977) 1 BVC 116
Butler & Tanner Ltd (1974) VATTR 72
Christian Art Ltd VAT(LON/90/414) No. 5940; [1991] BVC 1365
Cronsvale Ltd VAT(1983) VATTR 313; (1983) 1 BVC 1204
Fabbri and Partners Ltd (1973) VATTR 49
Graham (WF) (Northampton) Ltd VAT(LON/79/332) No. 908; (1980) 1 BVC 1132
GUS Catalogue Order Ltd and GUS Merchandise Corporation LtdVAT(MAN/87/352) No. 2958; (1988) 3 BVC 829
H G Kewley Ltd; C & E Commrs v WLR[1965] 1 WLR 786
Infocard VAT(LON/90/1314) No. 5732; [1991] BVC 617
Marshall Cavendish Ltd VAT(1973) VATTR 65; (1973) 1 BVC 1004
Marylebone Cricket Club VAT(LON/81/88) No. 1074; (1981) 1 BVC 1152
McMenamin (HMIT) v Diggles TAX[1991] BTC 218
Odhams Leisure Group Ltd VAT(LON/89/364 and 554) No. 4430; (1989) 4 BVC 806
Odhams Leisure Group Ltd v C & E Commrs VAT[1992] BVC 11
Panini Publishing Ltd and Mirror Group Newspapers LtdVAT(LON/88/166 and 887) No. 3876; (1989) 4 BVC 704
Pippa-Dee Parties Ltd; C & E Commrs v VAT(1981) 1 BVC 422
Scott; C & E Commrs v VAT(1977) 1 BVC 139
Van Dijk's Boekhuis BV v Staatssecretaris van FinanciënVAT(Case 139/84) (1985) 2 BVC 200,161
Supply - Zero-rated supply - "Books etc." - Whether packets of cards sent in series could in each instalment amount to a book - Whether each card of a collection of recipes marketed in packs amounted to a leaflet - Whether packs of stiff pages held together by an adhesive and to be inserted over a period into a binder constituted books, booklets, leaflets, brochures or pamphlets -Value Added Tax Act 1983 schedule 5 group 3Value Added Tax Act 1983, Sch. 5, Grp. 3, item 1.
The issues were: (1) whether an initial package of a series of packages, the first comprising a binder, three packets of cards, divider cards and an index, constituted a book. (2) Whether varnished cards marketed in series to build a collection of cookery recipes individually amounted to a leaflet. (3) Whether a pack of pages held together by an adhesive punched ready for insertion in a binder constituted a book, booklet, leaflet, brochure or pamphlet.
The appellant sold its published products by direct mail marketing to members of the general public throughout the UK, Isle of Man and the Channel Islands. It solicited custom by writing to potential customers or by advertising. Four of its products were the subjects of decisions by the commissioners that the items in question were not entitled to zero-rating. The publications were Wildlife Fact File, Success with House Plants, My Favourite Recipes and Home Health Fact File: Lifestyle A.
These two publications were sent in series form with the initial package consisting of a binder, three packets of cards, divider cards and possibly an index. Following that consignment a second package would arrive four or five weeks after the first and would consist of one packet of 12 cards. Subsequently packages were dispatched at roughly three weekly intervals and the entire series filled seven binders.
The appellant contended that the publications, whether as a complete series or as an individual consignment, were zero-rated as amounting to books. On the basis that each consignment had to be considered separately, each set of cards stood on its own using any test, including that of artistic, scholarly or physical completeness.
The commissioners contended that parts of books, unless instalments of large works, such as books of reference were of their essence not books and were therefore standard-rated.
The series consisted of cards approximately 4.5 ins x 4 ins with a varnished wipe-clean surface. One side had an illustration of a completed dish and on the other was a recipe with other details. They were marketed in packs in series to build up a completed collection of 60 packs to be stored in a box-like card index box.
The appellant contended that as the cookery cards were single sheets of small size, likely to be hand-held and intended to be read by one person at a time, they complied with the description of leaflets contained in Customs' Leaflet 701/10/85. They were not "flimsy" but this ought not to be a necessary qualification.
The commissioners contended that a leaflet was by its nature flimsy and that cookery cards could not amount to leaflets within the zero-rating schedule.
This item comprised a series of stiff pages to be inserted over a period into a binder. The pages were held together by a non-sticky adhesive and punched ready for insertion in a binder.
The appellant argued that the pages so held were either books or booklets or leaflets in the sense of Leaflet 701/10/85 which consisted of a number of pages. Further, the pages might constitute a brochure or a pamphlet.
Held, dismissing the company's appeal:
Wildlife Fact File and Success with House Plants
1. On the first question of what constituted the nature of the supply, each single supply of each delivery was a separate supply and made for a separate consideration.
2. If the initial package did not itself constitute a book that package could not to be said to be a component part of any specific book, bearing in mind the possibility of cancellation of the order at any time.
3. If a conventional hard cover had only about a quarter of its pages inserted it would properly be regarded as less than a book. In this case the initial package would provide about the same proportion of contents for the accompanying binder and therefore on the necessary test of a physical examination the product did not amount to a book.
My Favourite Recipes
The built-in durability inherent in the UV varnish enabling the product to endure hard and repeated service in the kitchen distinguished the items from leaflets which could only expect a limited life. The cookery cards were not leaflets.
Home Health Fact File: Lifestyle A
The mere sticking together of the disconnected pages could not of itself turn the pages into a book, booklet, pamphlet, brochure or leaflet. Just because the pages were temporarily stuck together for convenience of delivery they did not combine to make any greater whole.
[The tribunal set out the facts summarised above and continued as follows.]
The appellants contend that supplies to customers of these publications are to be zero-rated as being within Value Added Tax Act 1983 schedule 5 group 3item 1 of Grp. 3 of Sch. 5 to the Value Added Tax Act 1983: "Books, booklets, brochures, pamphlets and leaflets". It will be seen from Customs and Excise Leaflet 701/10/85, which sets out their present views and practice, taking decisions of the tribunals and the courts into account, that they regard as zero-rated loose-leaf books, whether complete with their binder or not, and amendments to zero-rated loose-leaf books even if issued separately. Parts of books, however, they regard as standard-rated but if a large work, such as a book of reference, is published in instalments, each of which is complete in itself, they accept it as zero-rated.
The first question I have to ask is: what is supplied? Is there a single supply of the full work or a series of supplies of each delivery (or indeed is the delivery of a further binder with cards to be treated as two supplies since they will be invoiced as separate items); on the second alternative the most significant supply will be the initial package.
The question I have to ask myself, as I understand it, is "what did the appellant supply in consideration of the money that he charged the customer?" (British Railways Board v C & E Commrs VAT(1977) 1 BVC 116; C & E Commrs v Scott VAT(1977) 1 BVC 139) and I must bear in mind that taxable transactions should not be artificially dissected so as to demonstrate as being the service provided, or the consideration given, something other or less than that which appears to have been the service provided or consideration given upon examination of the entire transaction (C & E Commrs v Pippa-Dee Parties LtdVAT(1981) 1 BVC 422 at p. 428). But in my view each package is a separate supply and for a separate consideration, even though I accept the appellant remains bound to continue the delivery of packages until either the full series has been delivered or the customer has cancelled. I do not think I need consider whether I should dissect the supply in a consequent consignment of pages from the supply of an accompanying binder.
So I must now consider the initial package and ask myself whether what is supplied is a book.
It will be remembered that the initial package consists of a binder, three packets of cards, divider cards and possibly an index. Mr Cordara [for the company] argues that the fact that the customer has to do a little minor work in putting the cards into the binder would not affect the issue whether the constituted entity was a book or not. He relied on two purchase-tax cases, Betterways Panels Ltd v C & E Commrs UNK[1964] 1 All ER 948 and C & E Commrs v HG Kewley Ltd WLR[1965] 1 WLR 786, which are both "kit" cases. Miss Tompkinson [for the commissioners] pointed out that purchase tax was a different tax covering only goods and not Mr Cordara also referred to Van Dijk's...
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