The VAT treatment of children’s clothing has always been a source of confusion. According to HMRC sales of clothing designed for young children are zero rated. No VAT is payable by the supplier or manufacturer of the item.

When is a blanket an item of clothing?

APenalties recent case between HMRC and a supplier of fleeced blankets with sleeves hinged on whether such items are indeed clothing. We can imagine that a hefty tax bill was riding on the outcome of the decision.

The taxman argued that the product was not clothing as it lacked fastenings and was not intended for use when moving. HMRC also said the size range of ages 3-10 years and 10-13 years are more consistent with blankets.

But the seller of the product insists that the product is indeed clothing.

So what was the decision?

The decision by Judge Jonathan Cannan at the First-tier Tribunal agreed that the item is in fact clothing.

Clothing generally refers to items made of fabric or some other material which are worn to cover the body parts of the body in order protect the wearer from the elements, to preserve modesty and/or for the purposes of fashion.

All clothing may be said to be worn.

An item of clothing is worn where it is appropriately shaped to accommodate the contours and movement of the body, having regard to the functions it is intended to fulfil.

Given this definition the defining factor of the fleece was the fact it has sleeves. A blanket cannot reasonably be said to be worn in contrast to this product.

Therefore no VAT was payable to HMRC!

If you need help with your VAT Returns get in contact with us – our expert team is waiting to answer your questions.

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