How to apply VAT on mixed goods in one package, such as Gift Baskets?

Dear HMRC colleague We are currently selling high-end hampers. It is a single transaction for each sale. We apply a full price for each Collection Hamper. Each hamper includes mixed-rate food, drinks, confectionery, and gift, and the basket itself is taxable as well. The majority of them are 0-rated and only a few goods are standard-rated. Product cost consists of 87%of zero-rated products and 17% of the standard-rated product. I heard that, for food hampers, if the standard rated part is lower than 20%, we can ignore the standard rated part and rate all products as 0%rated. Does this approach applicable to my case? Is there any VAT guidance that we can follow clearly? Thank you very much for your help. Best regards,

Hi,

Please see the guidance below:

Mixed supplies: mixtures, promotional linked items and packaging

Thank you.

Dear HMRC Colleagues, I have follow-up questions regarding this topic. The guidance mentioned that "Where, however, you supply together a minor standard-rated item with a main zero-rated food item you can treat the supply as a single supply of the main zero-rated item where the standard-rated item: -is not charged at a separate price -costs you no more than 20% of the total cost of the supply -costs you no more than £1 (excluding VAT) Once these conditions have been met, the linked goods are treated throughout the rest of the distribution chain as a single zero-rated supply." My question is whether all the conditions have to be met in order to apply " a single zero-rated supply."? I.e. For the hampers that we sell, there are no separate charges for each item included, and the standard-rated goods are less than 20% of the total cost of supply. However, they cost more than £1. In this situation, whether " a single zero-rated supply" could be counted? Thank you very much for your clarification. Best regards,

Hi.
Where you supply together a minor standard rated item with a main zero rated item you can treat the supply as a single supply of the main zero rated where the standard rated item:
•is not charged at a separate price
•costs you no more than 20% of the total cost of the supply
•costs you no more than £1 (excluding VAT)
All of the above conditions would need to be met.
Thank you.