Kimberly-Clark operated a promotion whereby it sold “Huggies” nappies in a plastic toybox rather than the usual packaging. The toybox would have other uses beyond being the means for selling the Huggies. The first issue was whether there was a single composite supply or there were two multiple supplies. If the former, the supply of the toybox would be part of the composite zero-rated supply of the nappies under Item 1, Group 16, Schedule 8 VATA 1994. If not it would be a separate standard-rated supply. The Tribunal concluded in the Commissioners’ favour.

The second issue was whether there was a disposal of business assets for no consideration and whether the “small gifts” exception in paragraph 5, Schedule 4, VATA 1994 applied. Again the Tribunal considered it did not.

Hugh McKay appeared for the Respondents