The classic example is the meal deal. The cold takeaway sandwich is zero-rated, the fizzy drink is standard-rated and the piece of confectionery is, too. Technically, itʼs a mixed supply for VAT purposes. Practically, itʼs a headache.

Whatʼs the right way to sort out the VAT if you sell goods or services as a package or bundle? Thereʼs a single price – but the different parts of the package have different VAT liabilities. Itʼs all about apportioning the amount the business receives – the ʻconsiderationʼ – and the problem is that thereʼs more than one way to tackle the calculation. The most common methods are based on selling price or the costs incurred in making the supplies. However itʼs done, the principle is that ʻa fair proportionʼ of the total payment gets allocated to the different parts, and the business needs to be able to justify its calculations.

It’s complex and HMRC knows businesses make mistakes. Concerned that not all methods of apportionment currently in use are ʻfair and reasonableʼ, itʼs published updated guidance. The aim is to ʻencourageʼ apportionment based on selling price – although itʼs not mandatory.

If you would like more information or any advice on this article then please contact us on 01295 250401 or email You can also contact us here with your query and we will get back to you.

Information for readers: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.