In a recent case considered by the courts a company that sold a baby lifting blanket appealed a ruling by HMRC that the supply was standard rated for VAT purposes.
For the company this placed them at a competitive disadvantage as retail outlets selling the item were required to charge VAT at 20%.
At issue was whether a Snugglebundl qualified as an article designed as clothing or footwear for young children and should therefore be zero rated for VAT when sold.
The First-tier Tribunal disagreed with HMRC’s judgement and the appeal was upheld.
The case is of interest as it helps to clarify that an item of clothing can have other uses and still qualify as clothing for VAT purposes; although the decision in this case is “fact sensitive”.
