VAT on Print - could it be more confusing?

The rules and regulations on VAT on printed items is a minefield, even after working within the print industry for over 10 years now I still have to refer to the HMRC website from time to time.

A client of mine only last week said that she isn’t bothered about vat as she isn’t vat registered when in reality she is exactly the person who should be concerned about vat. Depending on what she purchases she could find an additional 17 ½ % charged on top of what she was originally quoted.

She asked me why printers couldn’t quote all prices with VAT and I can see where she is coming from. It would benefit the smaller non vat registered business to know whether the item is vatable or not before they purchase and it is definitely something I will be looking at in the very near future.

Anyhow back to the regulations – I don’t want to bore you with this as I am quite aware after spending a lovely couple of hours last week refreshing my memory on the minutiae of VAT rulings in the UK how sleep inducing it is so we will just look at the most commonly printed products.

The rules and regulations regarding VAT on print are dependant on what the item is, what it is to be used for and what it is printed on.

Most print items as classified by the HMRC are standard rated (which means you are liable to pay standard rate VAT, currently 17½%) and where it gets us business owners is on our stationery e.g business cards, letterheads, compliment slips, posters, postcards and envelopes.

However there are exceptions to the rules and they are for the following:

Books and booklets

Restricted to goods produced on paper and similar materials such as card and are usually bound with a cover. Goods containing text in other formats such as audio or video cassettes or CD Rom are classed as standard-rated.

Brochures and pamphlets

Brochures usually consist of several sheets of reading matter fastened or folded together, but are not necessarily bound in covers. They usually contain advertising material in the form of text or illustrations.

Pamphlets are similar, but are usually comprised of material of a political, social or intellectual nature.

Leaflets

Leaflets normally consist of a single sheet of paper not greater than A4 in size. They must be intended to be held in the hand for reading, convey information and must be supplied in a minimum quantity of 50 to permit general distribution. They must be printed on limp paper and designed to be read a few times and then thrown away. Items printed on stiff paper and card are not automatically excluded, however the use of stiff card indicates that the item is to be kept and would then be excluded from the leaflet classification.

If an item has an area to be completed, as long as that area is under 25% of the total area then it may still be classed as Zero rated.

Whatever the area for completion, a publication which is designed to be returned whole after completion is always standard-rated.

Here are some more items not covered above and their VAT liability:

Accounts (fully printed)	Zero-rated
Albums	Standard-rated
Annuals	Zero-rated
Appointment cards	Standard-rated
Articles of association (complete in booklet form)	Zero-rated
Badges	Standard-rated
Bags, paper	Standard-rated
Calendars	Standard-rated
Catalogues	Zero-rated
Certificates	Standard-rated
Circulars	Zero-rated
Colouring books (children’s)	Zero-rated
Comics	Zero-rated
Company accounts and reports	Zero-rated
Delivery notes	Standard-rated
Folders	Standard-rated
Holiday and tourist guides	Zero-rated
Instruction manuals	Zero-rated
Invoices	Standard-rated
Labels	Standard-rated
Magazines	Zero-rated
Mail order catalogues	Zero-rated
Manuals	Zero-rated
Membership cards	Standard-rated
Memo pads	Standard-rated
Menu cards	Standard-rated
Music	Zero-rated
Newspapers	Zero-rated
Note books, pads and paper	Standard-rated
Order books and forms	Standard-rated
Orders of Service	Zero-rated
Painting books (children’s)	Zero-rated
Picture books	Zero-rated
Price lists (fully printed leaflets or brochures)	Zero-rated
Printed pictures	Standard-rated
Programmes	Zero-rated
Rag books (children’s)	Zero-rated
Receipt books and forms	Standard-rated
Reply-paid coupons and envelopes	Standard-rated
Sports programmes	Zero-rated
Stickers	Standard-rated
Tickets	Standard-rated
Time cards and sheets	Standard-rated
Timetables (in book or leaflet form)	Zero-rated
Trade catalogues	Zero-rated
Trade directories	Zero-rated
Travel brochures	Zero-rated
Vouchers	Standard-rated
Wall charts	Standard-rated

Please note the above is not all encompassing and for more information go to the HMRC website www.hmrc.gov.uk/vat

Recycled paper is certainly the ethical way to go when it comes to printing as it is a practical resource which preserves energy. Recycled paper typically uses 70% less energy than virgin paper*.

In the past recycled paper has, in quality and cost, been the poor relative when compared to virgin pulp paper, but improvements in recycled paper production and the combination of mixing virgin pulp with recycled pulp has meant that it is now almost impossible to spot the difference between the two. And because of this the cost difference has been brought down to approximately 10% difference between recycled over virgin pulp paper.

Recycled paper advantages

Every year more than 11 million tonnes of paper and board are consumed in the UK and a considerable amount of that ends up in landfill sites

The breakdown of bio-degradable substances in landfill (which includes paper) causes the production of methane gas. Methane gas remains in the atmosphere for approximately 9-15 years and is over 20 times more effective in trapping heat in the atmosphere than carbon dioxide, so if we can avoid putting paper into landfill we’ll be doing our bit to prevent global warming. According to the environmental charity Waste Watch for every tonne (about 2 pallets) of 100% post-consumer recycled paper purchased instead of virgin fibre paper, we save:

1. At least 30,000 litres of water.

2. 3000 - 4000 KWh electricity - enough power for an average 3 bedroom house for one year.

Much of the UK wood pulp used in the paper and board making processes comes from Scandinavia and the majority of natural forests in that area have been converted to intensively managed forests where the natural flora and fauna in that area struggle to survive. There is only about 5% of Scandinavian old-growth forestry remaining and each day more and more is being logged and as a result, hundreds of plants and animal species are becoming endangered*.

We also have to consider the increased carbon footprint to get that paper pulp from Scandinavia to the UK paper mills. Paper pulp used for recycling, particularly office paper, tends to be based around our cities. The UK could produce much more of its own paper and not have to rely on expensive imports if the market for recycled paper increased which could save us up to £800 million on balance of payments. This saving could then be reinvested into more recycling centres countrywide and publicising recycling, so that there is an increased participation by residents.

About 20-25% of paper cannot be recycled, as the fibres degenerate each time they are recycled. Typically paper can be recycled approximately 5-7 times before the fibres become too small (the smaller the fibres the lower the quality of paper produced) so we must be aware that there will always be a need for virgin pulp, although we can reduce the amount required through using recycled paper.

So - should you choose Recycled Papers?

As said before it is an ethical issue and is up to the individual or organization, but the main advantages are:

1. Reduced landfill sites- our landfills are rapidly becoming full and fewer sites are available – who would want one of these on their back door step?

2. The more we recycle the higher the demand – we currently recycle because there is an end market, if that end market is not there then we cannot recycle.

3. Paper recycling optimises the use of a valuable material and reduces the amount of virgin pulp required. Although forests are increasingly managed in a sustainable way there is a need to reduce wastage by using more recycled content.

* Source Friends of the Earth.

RGB & CMYK

RGB Stands for Red, Green and Blue and they are know as 'additive colours'. Additive colours are used for light projection or for displaying images on a screen and are primarily used in web design. If you combine the three colours of RGB, in the middle, white will appear. RCG is the principal behind TV screens and computer monitors and uses light to produce its images.

CMYK stands for Cyan, Magenta, Yellow and 'Keyplate' Black. They are mainly used in printing and graphic design. They are different from RGB because if you combine Cyan, Magenta and Yellow it will form Black, however this black is not always acceptable during the print process hence the reason why Keyplate Black is used. Printers prefer files in CMYK because the majority of their print machinery is geared for this process.

The Offset Litho Process

Offset Litho printing works on the principle that oil and water do not mix. A photographic image is transferred onto a thin metal plate which is treated so that the image area attracts oil based inks while the wet no-image areas resist them. This plate is then passed over rollers of a clean solution or water and then passed over inked rollers so the oil based inks “sticks” to the image area. The image is then transferred onto a rubber blanker which is then transferred onto the papers surface. Each plate prints a separate colour and dependant on the press size they can work in any combination of colours including pantone and metallic inks but mainly work in four colour process (CMYK).

Because of the upfront set up costs of the plates and the presses this makes Off-set Litho printing more beneficial to longer run print projects.

There are many types of Offset Litho printing presses available for example single colour, two colour, four, five, eight and ten colour with different presses being able to print on various sizes of paper from Oversized A3, A2, A1 and upwards.

The Digital Print Process

Similar to your office printer or photocopier. Is very cost effective and is usually used for quick turnaround or short run jobs because the process is very similar to sending a job from your PC to your printer. The quality of digital print has improved dramatically over the last few years and should soon be comparable to litho printing. They are limited to printing in four colour process (Cyan, Magenta, Yellow and Black - CMYK) and therefore cannot use single Pantones or metallic inks.
Other uses are poster printing and large format vinyl printing.

Do you know which printer is the right one for your project?

Do you have time to go through the yellow pages to look for a printer? There are so many different types of printer out there that you could probably call every single one in your area and not necessarily get the right one for your print requirement.

I have worked for many years in various print companies and each is geared up to produce a limited range of products cost effectively and if they couldn’t produce it cost effectively they would broker the job to one that could, put a mark up on that job, and sit back and let someone else do the work.

There are many types of print processes and I will go through these with you over the next few weeks.

Print Management is not Dead!

Print management has had a bad reputation over the past few years.

There have been too many individuals taking back handers to place clients print and people jumping on the print management band wagon using cheap overseas suppliers without really understanding the print process or their clients needs.

A print management company should always add value, its not just buying and selling print, done properly it encompasses every aspect of a clients business.

For a print management company to be effective they must do all of the following:

They must build strong ongoing relationships with their clients

Keep abreast of new print and production technologies

Respond quickly and efficiently to their client’s changing requirements

Be proactive and take responsibility

Be flexible and accountable

Save clients time and money

Meet tight deadlines