HMRC has challenged the zero-VAT status of adult colouring books, demanding that publishers charge a 20 per cent sales tax on the increasingly popular relaxation aids.
Michael O’Mara, chairman of family-owned adult colouring book publishing firm Michael O’Mara Books, told The Bookseller: “It is our view that this decision flies in the face of the relevant legislation. We and other publishers, following the lead of the Publishers Association, are fighting this decision and we hope that HMRC, on reflection, recognises that it has got this wrong.”
Stationery items – including diaries and address books – and books “primarily intended for completion or detachment” are currently liable for the full 20 per cent VAT rate. It is thought that HMRC will argue that adult colouring books should be considered as part of one of these categories.
Over three million adult colouring books were sold in 2015, bringing in revenue of over £20m to booksellers. The craze for the novelty item is thought to have started when Scottish illustrator Johanna Basford published Secret Garden in 2013. She has since sold ten million of her books for creative adults.
Large booksellers have benefited from the craze, with big players like WH Smith seeing book sales outpace expectations last year, and the industry as a whole seeing 0.4 per cent growth after four years of declines.
But the trend has done little to stem the tide of closing small bookshops. The number of independent booksellers on the UK’s high streets has halved since 1995 from 1,894 to 907 – and independent booksellers had one of the the highest proportion of closures in the first six months of 2015, according to The Local Data Company.
The Booksellers Association has staunchly defended books’ zero-rating when it comes to VAT, as well as criticising other forms of taxation thought to negatively impact on small shops.
“Business rates remain unreformed and represent one of the most disproportionate and burdensome costs that a book business has to face,” the authors of the organisation’s Bookselling for Britain manifesto argued in April 2015.
Don’t worry, it isn’t all bad news for independent retailers – plans for Small Business Saturday 2016 are already underway, and it’s going to be bigger and better than ever.
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