Zero rated printed matter

Paragon Customer Communications

This case concerns the liability of the supplies the taxpayer was making to Direct Line Insurance Services (DLIS). The taxpayer produced multiple sheets of information about an individual’s insurance policy, with the pages stapled together and bound in covers.

The taxpayer argued that it made a single supply of zero rated printed matter on the basis they produced insurance policy booklets. Any other services it provided were in its view ancillary to the principal, zero rated supply. HMRC also argued that there was a single supply, but that this was a supply of services being “a comprehensive service of administering and co-ordinating the provision of insurance details and information to the retail customers of DLIS”. HMRC also argued that, even if there was a supply of goods, they did not have the necessary characteristics to be zero rated.

The FTT was of the view that the services were part of the process of producing the goods. The reality was that DLIS wanted the goods to be produced by the taxpayer and sent to policyholders. The FTT concluded that the taxpayer made a single supply of goods.

The question then was whether the goods were zero rated booklets. It was agreed that they had the physical characteristics of booklets but HMRC argued zero rating did not apply because the items contained the terms of insurance policies and would not be read or looked at. HMRC added that they could have been issued as letters or loose pages. Initially HMRC argued zero rating could not apply because DLIS, as the recipient of the supply, would not read the documents themselves. However, this argument was not pursued.

The FTT rejected HMRC’s arguments. The content of the booklets was irrelevant and DLIS did encourage policy holders to read them and check that the contents were correct. The FTT noted that an error in the policy terms could invalidate the insurance cover. The FTT also concluded that the fact they could have been sent as letters was not relevant.


This is another useful reminder of case law on single versus multiple supplies. The customer’s point of view and the way the contract was priced (cost plus, based on the volume of goods produced) were both considered important. The decision also looks at cases on the nature of books and booklets and their contents, such as Harrier LLC on photobooks.