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Have you paid VAT on samples to customers?

A recent AG’s Opinion in the case of EMI group (C581/08) has cast some doubt over the UK’s current VAT rules on samples and gifts. EMI provide large numbers of free CD’s for promotional purposes. It challenged the Court that VAT was due on the value of such samples.

The AG has stated that Member States must not impose a quantitative limit to such gifts but can fix a ceiling on a 'gift of small value'.

In the UK currently only the first sample provided is VAT free. For business gifts, there is an annual cumulative limit of £50, based on the cost of providing a series of gifts to the same person.

If the final ECJ decision follows the AG, then the UK and several other Member States may be forced to change their rules. If this happens, businesses which have overpaid VAT will be able to submit retrospective refund claims.

Jane Stacey is a VAT adviser and a senior manager at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Jane you can call her on 01727 869141.



Date: 4th June, 2010
Author: Jane Stacey


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