VAT newsletter – January 2026

Welcome to this month’s VAT News.

Littlewoods got a snappy decision on a VAT reclaim for photography. The online retailer, which paid VAT on product photography used on the website and catalogues, said the tax was reclaimable, but HMRC disagreed. From their perspective, Littlewoods sold other products – like credit and insurance – which are subject to VAT, and therefore, Littlewoods were only able to claim back part of the VAT on the photography.

But, when Littlewoods got the Courts in the picture, the tribunal framed their favour on Littlewoods and agreed that the images were clearly linked to selling goods and not financial services – a photo finish and a great result for Littlewoods, which was successful in securing its claim!

In the Courts

Reading between the lines

It wasn’t just Littlewoods that were successful in their case against the Courts.

Story Terrace Limited (ST) produces biographies for customers using ghost writers and claimed that as it was supplying books, which are zero-rated, there is no VAT to pay.

HMRC said that as ST provided writing services, and, as that was seemingly its predominant service, was liable for a VAT charge.

But, the Court agreed with ST because it considered the end user’s perception of what they get – and that the provision of the book as the most important element of the service.

Food or catering?

Slice of Pie Limited (SPL) supplies food to nurseries for lunches and afternoon teas. The food is supplied cooked and hot, with each component of the meal delivered in separate containers. Upon delivery, nursery staff would prepare and serve the food onto individual plates for each child.

SPL claimed the supply was zero-rated as a supply of food, but HMRC disagreed saying that the supply was of catering and therefore VAT applied.

The Court agreed with HMRC, concluding that the additional steps undertaken by the nurseries did not amount to significant food preparation to make the VAT reclaimable.

Adam Lloyd