Daily Archives: December 7, 2008

Durham Cathedral Shop: More VAT Questions

Phil Groom writes:

Durham Cathedral Shop Receipt

Durham Cathedral Shop Receipt

A few days ago, Matt Wardman posted a query about Durham Cathedral Shop’s VAT Number History. Today, I’d like to follow that up by focusing on one specific transaction: the purchase of two Durham Cathedral branded fudge bars on November 24th: copy of my receipt on the right.

It’s a very small purchase, £1.50, an almost insignificant contribution to the day’s sales — but it’s not the amount that’s puzzling me: it’s the VAT status of the items purchased.

Books are zero-rated for VAT: confectionery and most gift items are not. Yet this receipt very clearly shows that this transaction was processed as zero-rated. This means that it’s unlikely to show in the shop’s VAT returns to HMRC; that HMRC are unlikely to get their 17.5% cut (by my calculations, about 23p) on that transaction.

Several explanations come to mind: incompetence; negligence; a simple goods-in or till programming error; perhaps a special exemption for Cathedral Shops whereby they don’t have to charge VAT on ‘Gift Items’; or there’s the unfortunate possibility of intentional fraud — but I’m sure people of Philip and Mark Brewer’s integrity would never set out to defraud anyone, least of all HMRC.

No doubt such errors are routinely picked up and corrected by the company’s accountants; but in the meantime, I can’t help wondering how long this has been going on, how many ‘Gift Items’ are going through those tills as zero-rated. Could be an awful lot of 23p’s and more that need accounting for…

Next time, by the way, I hope to see the price on those fudge bars reduced by a penny or two, now that the VAT rate is down to 15%; unless, of course, there is that special exemption for Cathedral Shops…