The Package test rule:
The package test is a concession offered to the printing trade, whereby a number of items sent out together can be VAT-free if the majority of the items are zero rated for VAT. This would include donation forms and envelopes which normally have VAT, as long as they are being sent out with brochures or books which are zero rated.
A package is a collection of printed matter enclosed in some sort of wrapper. The most common examples are:
The One stop shop rule:
If the production costs of the pack can be zero-rated (using the ‘package test’ rules), then packaging can be treated as an ancillary supply, and would attract the same VAT treatment as the principal supply (the pack itself). But the packaging needs to be managed by the same supplier who is producing the printed item from which the VAT relief derives.
Managed by LeachPrint:
The final condition is that the company which is acting as the point of ‘single supply’ for both the print and the packaging, needs to have print production as its core activity.
(It can’t be your creative agency, or your postal provider, both of whose core services are standard-rated).