Second-Hand Law Books and VAT: Is VAT Due When You Sell?

If you are selling a firm's law library, or a late relative's law books, VAT is one of the questions that can hold everything up. HMRC's own guidance answers most of it, and for books the answer is a simple one: they are zero-rated.

We buy law books and give no tax advice, so everything below comes from HMRC's published guidance and the VAT Act itself, with links so you can read them. Your accountant has the last word on your own sale.

Is VAT charged when you sell second-hand law books?

Books are zero-rated for VAT in the UK. The zero rate is a VAT rate of 0%, and HMRC's VAT guide says VAT is not payable on zero-rated supplies.

The rule sits in Group 3 of Schedule 8 to the Value Added Tax Act 1994, the list of zero-rated goods. Its first item is "books, booklets, brochures, pamphlets and leaflets", and its second is "newspapers, journals and periodicals". In VAT terms, a bound volume of law reports sits alongside most food and children's clothes, which HMRC also gives as examples of zero-rated goods.

Books have been zero-rated for as long as the UK has had VAT. HMRC's manual on books records that in 1969 the Conservative party committed itself to zero-rating books, journals and newspapers "on the general principle of avoiding a tax on knowledge", and VAT arrived on 1 April 1973 with the zero rate already in it.

Does the zero rate cover second-hand books?

Nothing in the law's list, or in HMRC's notice explaining it, turns on whether a book is new. HMRC's VAT manual on books says the starting point for deciding whether something qualifies must be its physical characteristics and not its function. In other words, a book is judged by what it is in your hands. HMRC's notice on zero-rating books and printed matter, VAT Notice 701/10, also lists antique books among the zero-rated items, so age does not take a book out of the zero rate.

Which parts of a law library count as books for VAT?

A law library is more than rows of bound volumes, so it helps to know how Notice 701/10 treats each part of it.

• Bound volumes, such as law reports, Halsbury's Laws and practitioner texts. The notice describes books as text "bound in a cover stiffer than their pages", and lists reference books among the zero-rated items.
• Looseleaf works, the services kept in ring binders and updated with new pages. The notice zero-rates "loose-leaf books, manuals or instructions, whether complete with their binder or not", and "amendments to zero-rated loose-leaf books, even if issued separately".
• The binders themselves. A binder supplied with the looseleaf pages that make up a book is treated as part of the zero-rated supply. An empty binder is zero-rated only if it is designed to hold a looseleaf book and has that book's exact title printed on the outside. Other binders for general office use, including binders for journals, are standard-rated.
• Journals. These fall under the second item, newspapers, journals and periodicals. The notice describes journals and periodicals as issued in a series at regular intervals, more often than once a year, and gives legal information as one example of their specialised content.
• Rare and antique law books. Antique books are on the notice's zero-rated list.
• Anything less than a complete item. The notice lists parts of books, unbound pages and separate illustrations as standard-rated.

Does it matter if the seller is a law firm or an estate?

It matters for whether VAT comes into the sale at all. Section 4 of the VAT Act 1994 says VAT is charged on a taxable supply "made by a taxable person in the course or furtherance of any business carried on by him". So the questions are whose books they are, and whether the sale is part of a business.

A VAT-registered firm. HMRC's VAT guide (Notice 700) says that if you sell goods that form part of the assets of your business, this is normally a supply for VAT purposes. The same guide says zero-rated supplies are treated as taxable supplies in every way apart from the VAT itself, which is why your accountant will want to know about the sale even though the books carry no VAT. If the firm is closing and cancelling its VAT registration, the guide also notes that VAT may be due on stock and assets on hand at that point, so ask how the library is treated. And if the library goes with the whole business in a sale as a going concern, special rules apply.

An executor, a family or a retired lawyer. Whether a sale is made in the course of a business depends on whose books they were. A lawyer's own books are one thing, and the assets of a sole practitioner's practice may be another. That is a question for the accountant or solicitor dealing with the estate, and they will want to know how the books were held. If the books are being valued for probate, our guide to probate valuation of law books explains the figure HMRC asks for.

Whichever of these you are, the books themselves are zero-rated goods, so the VAT question is about records and paperwork more than about adding anything to the price.

What do you tell your accountant?

Your accountant can settle the treatment quickly with a few facts. Have these ready:

• Who owned the books: the firm, a sole practitioner's practice, or the lawyer personally, and whether the owner is VAT registered.
• What is in the sale: bound volumes, looseleaf works with their binders, journals, and anything that is not a complete book, such as loose pages or empty binders.
• The date of the sale and the amount paid into your bank account.
• Whether the firm is closing, cancelling its VAT registration, or selling the whole business.
• The two HMRC references above: VAT Notice 701/10 for what counts as a zero-rated book, and section 9.1 of VAT Notice 700 for selling business assets.

Selling the library

Once the VAT question is settled, the sale itself is simple. You send us photos of the shelves, or a list if you have one, and we value the collection for free. If you go ahead, we pack the books ourselves from the shelves and collect them free from anywhere in the UK, whether they stand in a firm's office or a lawyer's home.

If you are clearing a firm's library, our page on law firm library clearance covers clearing it for a move, a merger or a closure. If you are dealing with an estate, our page for executors clearing a late lawyer's library explains how we help.

When you are ready to sell, the first step is the valuation form, or a WhatsApp message to 07920 748314.