A VAT Free Valentines

Love is in the air again.  But then so is recession.  So in these hard times you’ll be especially keen to pick up a few bargains that don’t involve paying 20% of the price to the tax man.  So here are a few suggestions on how to adapt traditional valentine’s gifts so that none of your Valentine’s Day needs to involve George Osborne spending your hard earned cash.

The Card

First one is one of the toughest.  Cards, eCards you pay for, and even paper to make a card, all come with VAT.  You could try making one out of a zero-rate magazine or picture book.  Or maybe buy a zero-rated map and circle your house with a heart.  Luckily, whatever you do send, the postage will be VAT free!

Flowers

Grow your own.  This one involves planning ahead but, if you’ve got the skill to do it, seeds at 0% are a far better option than flowers at 20%.

Dinner

You may not need an extra excuse to avoid the happy couple competition at your local restaurant, but happily the 20% VAT on catering and hot take-away food gives you one.  If you can pluck up the courage to cook at home you can have oysters, asparagus, fantastic steak and organic vegetables, all at a pleasing 0% VAT.

Chocolates

Sadly chocolate love hearts, chocolate truffles, and Quality Street all come in with 20% VAT.  But pick up some brownies or a chocolate covered cake from M&S and you’re back in zero-rating...

Photo Frame

This could be the year to avoid the ubiquitous heart-shaped photo frame at 20% VAT.  Happily, following last year’s Trueprint case, photobooks are now all VAT free, and just as romantic.

Lingerie

An old ploy for the smaller female has been to buy clothes in children’s sizes which are VAT free.  Somewhat reassuringly the legislation prevents this extending to lingerie so other solutions are needed.  Sadly I don’t really have any.  Maybe if it was made of food, but not sweets or chocolates as they’re all 20% rated confectionary.

Jewellery

Necklaces, earrings, rings and bracelets are all out I’m afraid.  But if he or she has got a taste for precious metals, a block of gold or some gold coins would come VAT free.

Going Out

Happily there are masses of things you can do together without the heavy burden of VAT.  Travel by tube or bus at 0%, instead of taxi or car at 20%.  A James Bond night at the Casino, no VAT, but if you start gambling there is admittedly betting and gaming duty.  Not-for-profit museums and zoos are all VAT free.  And similarly theatre and music; so avoid the profit making X-Factor gigs and get tickets for the not-for-profit Royal Opera House.

Romancing

Finally, if the evening progresses well, some more intimate romancing may come into play.  Just remember that all contraception comes at a reduced VAT rate of 5%.  Sure it’s not the full 20%, but if, like me, you want to be true to your VAT free principles abstinence is the only way.

Best wishes for a romantic VATless evening!

VAT Fact - Fine Wine

Now “dry January” has come to an end, a good bottle of red is surely featuring higher people's minds. With 20% VAT, plus excise and customs duties, the indirect tax implications can be substantial.

Where a business imports wine to the UK, customs and excise warehousing can be used to suspend the payment of VAT and duty until the wine is bought into “free circulation” e.g. drunk. This gives a great cash flow advantage, but if the wine remains in the UK ultimately taxes still need to be paid.

However, the beady-eyed advisor may note that “collectors' pieces” benefit from 0% customs duty and a reduced effective VAT rate of 5%. A potentially massive saving! So could wine be considered a collectors’ item of historical or ethnographic (cultural) interest?

Precedent comes from the decision in E Daiber v Hauptzollamt Reutlingen, identifying five criteria for classification as a “collectors’ piece”. So perhaps we can consider the recent sale of three bottles of Chateau Lafite 1869 (for a bargain approx £500k), in light of these specific criteria.
Link to info on expensive wine auction...

1. Possesses a certain scarcity value: Chateau Lafite has a small output and not many will have survived since 1869.


2. Not normally used for their original purpose: Given the article informs us there’s “a likelihood that at least one of them may be opened and drunk”, this suggests the majority of the bottles would not be used for their original purpose.



3. Subject of special transactions outside the normal trade in similar utility articles: Most wine is sold in shops, collectors’ items are generally sold at auction.



4. Of high value: Fairly self evident.


5. Illustrates a significant step in the evolution of human achievements or a period of that evolution: Perhaps of more debate but there is apparently huge interest in “pre-phylloxera vintages” and I’m sure many a wine buff would happily argue the cultural value of certain wines.

I leave this for you to decide...