Revenue and Customs Brief 17 (2016) outlines HMRC’s VAT treatment of colouring and dot-to-dot books. As a result, VAT Notice 701/10 (zero-rating of books and other forms of printed matter) has been updated accordingly.

The brief sets out the policy in respect of the VAT treatment of colouring and dot-to-dot books suitable for children and/or adults and is effective from 1 April 2017.

The last two years or so has seen a growth of books labelled or described as ‘adult colouring books’ and ‘adult dot-to-dot books’. Many suppliers have zero-rated these books in the belief they are a general book (like a paperback or hardback novel, for example) placing reliance on Item 1 of Group 3 to Schedule 8 of the VAT Act 1994.

The leading case on what is a book is ‘Customs and Excise Commissioners v Colour Offset Ltd [1995]’. In that case, the High Court found that a book is produced on paper or card, consists of a number of leaves and is bound in a stiffer cover. In addition, the book must be designed to be ‘read or looked at’.

While the adult colouring and dot-to dot books satisfy most of these conditions, in HMRC’s view they are not designed to be read or looked at. Therefore, it is HMRC’s opinion that while these books are not zero-rated under Item 1 of Group 3, they could be zero-rated under Item 3 of Group 3 as ‘children’s picture and painting books’ if changes are made as discussed with trade representatives.

The brief also clarifies HMRC’s policy concerning the VAT treatment of children’s picture and painting books, including colouring and dot-to-dot books, particularly those sold after 1 April 2017.

More information on the above is available in the brief which also deals with the treatment of supplies pre 1 April 2017 and the correction of errors.