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HM Revenue and Customs Brief 04/12


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Issued 5 March 2012

VAT: HMRC's position following the First-Tier Tribunal decision in the case of Harrier LLC

This brief is to confirm Her Majesty’s Revenue and Customs' (HMRC) position following the decision in the case of Harrier LLC in the First Tier Tribunal. The case concerned the liability of photo books. The Tribunal found against HMRC with regard to most of the items in question and upheld Harrier's appeal that the photo books were zero-rated. HMRC have decided not to appeal the decision.


Businesses who supply photo books.


Harrier provided customers with a photo book that comprised a number of photographs taken by the customer. Typically, the customer uploads his or her photographs and other images of text, drawings, handwritten text and so on to a third party website. The customer chooses the particular photo book template they desire and can arrange the layout of individual pages. Once the customer has completed their action they can then place their order. The order is electronically transmitted to Harrier who then produces the photo book using printing presses.

Harrier claimed that the photo books were zero-rated for VAT purposes as they fell within the definition of book under the law.

The decision

The Tribunal decided that the majority of the items in question were books and dismissed HMRC’s argument that the photo book was ancillary to a supply of services.

In making its decision the Tribunal took support from the High Court case of Colour Offset Ltd [1995], where it was found that a book has the minimum characteristics of having a significant number of leaves, usually of paper, held together by front and back covers usually more substantial than the leaves. The book must also be designed to be read or looked at.

Two items were found not to be books because they consisted of spiral binding and the pages had the quality and appearance of individual photographic prints.

HMRC policy going forward

Subject to the exception below, HMRC accept that a photo book which possesses, as a minimum, several pages, a cover stiffer than its pages and is bound, will qualify for zero-rating as a book. The book must also be designed to be read or looked at.

HMRC would not see a photo book as falling within the zero rate if either:

  • the photo book’s pages have the appearance and quality of individual photographic prints; or
  • the photo book that is held out for sale is capable of being dismantled, with individual pages that are removable or where individual pages can be easily removed without damaging the binding (for example, spiral binding).

This decision does not affect supplies where there is a predominate supply of services such as those where the customer is paying for and receiving photographic services that then result in the production of a ‘book’. An example of this is in the Tribunal decision of Risbey's Photography Ltd, Digital Albums Ltd (decision number 20783) where it was found that Risbey's provision of a wedding package which consisted of making arrangements for photography, taking and viewing of photographs and a wedding book displaying a selection of photographs, was a supply of services and not one of goods.

We consider that in these instances the photographic service is the dominant supply and that the wedding book is ancillary to the supply of the services. Accordingly, there is a single supply of standard-rated services.

The effect of the decision

If you consider that the supplies that you make are on ‘all fours’ with those of Harrier and the ‘books’ that you supply have the characteristics described above then your supply is likely to be of a book and therefore zero-rated.

If they do not then it is likely that they will be taxable at the standard rate.

Further Information

Details of how to make any adjustments relating to previous VAT Return periods can be found in VAT Notice 700/45 How to correct VAT errors and make adjustments or claims and from the VAT Helpline on 0845 010 9000.

Where you are in any doubt about the correct VAT treatment please contact the VAT Helpline.

About the Author

© Crown Copyright 2012.

A licence is needed to reproduce this article and has been republished for educational / informational purposes only. Article reproduced by permission of HM Revenue & Customs.

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Article Published/Sorted/Amended on Scopulus 2012-03-07 12:56:31 in Tax Articles

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