Following a recent decision in the Europeans courts, HMRC have published a new brief which clarifies the rules on when businesses can give away samples of their products VAT free.
Previously the UK rules were that when goods on which input tax has been reclaimed are disposed of for no cost, then VAT would normally be due. However this did not apply to, amongst other things, samples where it allowed for only one sample to be supplied to one person free of VAT.
This has now changed following the decision in the European Court. The new rules defined in the HMRC brief are that “where businesses provide samples of their products free of charge to individuals for marketing purposes, none of the samples are liable to VAT”.
The ECJ ruling means that there may be some businesses that have treated their samples as taxable supplies that should not have done and therefore they have a right to recover any VAT that has been overpaid (subject to limits).
If you think that this may apply to your business and you would like further information or help with reclaiming the VAT then please give one of us a call on 01733 371180 and we will be happy to help.