VAT Cost Apportionment

There have been a number of legal cases over the past 10 years regarding the supply of spectacles by Opticians. The debate has revolved around whether or not there is a single supply made by opticians upon the sale of a pair of spectacles, in which case there would be a single rate of VAT (i.e. 17.5%) or a mixed supply, leading to a reduced rate of VAT on the eventual sale.

The supply of spectacles is now held to be a mixed supply, as follows:-

Dispensing element - Exempt from VAT
Frames and lenses - Standard rated VAT.

Accessories sold as part of the total supply, such as chains, cases etc - Standard rated VAT.

Sight tests, whether private or under the NHS remain exempt from VAT.

The question arises, as to how to calculate the proportion of sales deemed to be at the standard rate for each pair of spectacles sold. In most cases this requires a cost apportionment calculation. As a firm who specialise in Opticians, we are able to calculate the relevant proportion based on your figures and obtain agreement from Customs and Excise on your behalf. We will ensure that all costs are included in the calculation to ensure we get the very best deal for you.