Boots & VAT. To add or add not!

[Gnarlyoak]

Does anyone know how VAT works on items of PPE?

 

Been browsing a few suppliers websites advertised on this forum, looking at prices for a new pair of boots, and have been struck by the seemingly muddled approach as to wether or not VAT is applicable or not.

 

At least 1 site states that their boots are VAT exempt, another site indicate that VAT will be added at checkout, whilst a third site gives you the option to state wether the boots are for business use (VAT added) or personal use (VAT exempt)!

 

In a similar vein, I recall when I bought my Stein climbing helmet a while back, that I was asked if it was for work or recreational use. When I asked what the difference was, I was informed that no VAT was charged for work use but was charged for recreational!

 

So how come VAT has become such a confusing issue on PPE

[Nigel]

Published on the HM Revenue and Customs website is a document (701/23 Protective Equipment) which explains fully the situation regarding the charging of VAT on both HELMETS and SAFETY BOOTS.

 

This document explains who should pay VAT and who is exempt along with the products which should and should not have VAT charged upon. All information has been taken from the HM Revenue and Customs document.

 

Although some items are classified as being zero-rated this will depend on who is purchasing the products and how the products are sold.

 

How do protective Boots and Helmets qualify for zero-rating?

In order for products to qualify they must fit in with one of the following conditions:

 

1) There is a clear definition of the difference between a Safety Shoe and a Safety Boot. Generally Safety Shoes fall outside of this category and qualify to have VAT charged.

 

2) Products which qualify as zero-rated must be manufactured to one of the appropriate European or British Standard; These are:

 

Boots

 

EN 345:1995 & BS EN 345:1993

Safety footwear for professional use

 

EN 346:1992 & BS EN 346:1993

Protective footwear for professional use

 

 

Helmets

 

EN 397:1992 & BS EN 397:1995

Industrial Safety Helmets

 

EN 812:1997 & BS EN 812:1998

Industrial Bump Caps

 

 

Please note: Standard EN12492 is not listed in the category, this will be addressed later.

 

3) The product must bear a mark indicating conformity to the standard

 

4) The product is for industrial use

 

5) The product must not be supplied to persons for use by their employees

 

Product supply chain, who is buying the product?

1) Supplies from a manufacturer to a wholesaler who in turn supplies a retailer can be invoiced zero-rated.

 

Example: Fletcher Stewart can supply and invoice a dealer at zero-rate with product so long as the product falls into the categories above.

 

2) You cannot zero-rate helmets or boots to an employer for the use by their employees.

 

Example: If an organisation purchases multiple items of product that fall in the categories above for them to give to their employees you must charge that customer VAT on the product. Remember they can reclaim the VAT if registered.

 

3) You can zero-rate listed products for customers/individuals who are purchasing the item for their sole use.

 

Example: If a customer buys a single pair of boots for themselves, you know these are for them as they try them on at the counter you can zero-rate their invoice.

 

Before you zero-rate any supply you should establish that your customer is not an employer purchasing boots or helmets for use by their employees:

 

This can be established by asking yourself:

 

1. Does the customers trading style suggest that they are an employer

 

2. Quantity ordered suggest bulk purchase by an employer for use by their employees

 

3. Nature of the contract indicates a trade order – such as a number of pairs of boots or helmets paid for by one customer for delivery to individuals.

 

Are accessories zero-rated?

If you fit accessories such as visors or ear protectors as an integral part of a qualifying helmet (see list) you can zero-rate the supply of the complete helmet. Accessories supplied on their own should be invoiced with the standard rate of VAT.

 

What if I sell a helmet rated to EN12492?

This standard of helmet is not listed within the category of zero-rated products; this helmet is generally used within the leisure industry as the standard for EN12492 is for Mountaineering and climbing. However this standard of helmet is used widely within the work place.

 

As stated in question 1, what makes a product qualify to be zero-rated it states “The product is for industrial use” so long as you can prove or the customer can prove it is for “Industrial Use” this can then qualify.

 

If the helmet is supplied as a complete item with a visor and ear defenders this should then make it qualify for Industrial Use (use at work)

 

If the helmet is supplied on its own there is a valid argument that this could just be used for recreational climbing which is classed as leisure which does not qualify to be zero-rated. If the helmet cannot be fitted with a visor and ear defenders we would suggest that VAT is charged on the product as the argument of “Industrial Use” would be very weak.

 

As a distributor we will charge VAT to the retailer on all helmets which carry the EN12942 standard. All accessories will also be charged with VAT. Helmets with the EN397 rating will be invoiced at zero-rate.

 

Document notes:

 

If you require further guidance on this matter we suggest you contact your local tax office.

 

Information taken from the HM Revenue and Customs website document 701/23 Protective Equipment dated March 2002. No updates to this document were listed on the website

 

This information is for reference only and could change without notice

[Jonesie]

HAHA I just copied and pasted the above as well, won't bother now.

[Frankie Lawrence]

'the product must not be supplied to persons for use by their employees'

 

Thats madness the employer gets it with no vat on but employees have to pay vat unless they buy it personally its all madness this countrys tax and vat!

[Nigel]

'the product must not be supplied to persons for use by their employees'

 

Thats madness the employer gets it with no vat on but employees have to pay vat unless they buy it personally its all madness this countrys tax and vat!

 

No, what is meant if an employer is buying them for an employee they must be charged vat (the employer is charged not the employee). The employer is charged vat whether they are vat registered or not.

 

This thread will open a debate which most will not want to bring out into the open as most people turn a blind eye to the situation.

Edited September 11, 2010 by Nigel

[treequip]

'the product must not be supplied to persons for use by their employees'

 

Thats madness the employer gets it with no vat on but employees have to pay vat unless they buy it personally its all madness this countrys tax and vat!

 

You have the cart in front of the horse, if you buy it for your own use (industrial) it’s zero rated, if an employer buys it for an employee the employer pays the vat

[Gnarlyoak]

Many thanks Nigel. My confusion has now been suitably allayed with your very informative post.

Edited September 11, 2010 by Gnarlyoak

[Frankie Lawrence]

You have the cart in front of the horse, if you buy it for your own use (industrial) it’s zero rated, if an employer buys it for an employee the employer pays the vat

 

yes thats what i mean why can an employer but it for himself personally with no vat but if he buts it for him employes its got vat on it?

[Steve Bullman]

seems to me, its probably easier from the retailers point of view to just list everything with the vat on

[Nigel]

yes thats what i mean why can an employer but it for himself personally with no vat but if he buts it for him employes its got vat on it?

 

If the equipment is invoiced to a company it should have vat charged on it even if it is for the bosses personal use. So invoiced to ABC company vat is charged, invoiced made out to fred bloggs no vat. but if fred bloggs buys more than one helmet it is assumed by the vat office that this could be for an employee and vat will be collected