Laurence King VAT-rates adult colouring books during HMRC dispute

Johanna Basford’s publisher Laurence King has decided to VAT-rate adult colouring books “for the time being” while it awaits the result of discussions with HMRC over the issue.

The Bookseller reported on Friday (20th May) that publishers and retailers could owe HMRC millions of pounds in uncollected VAT after the government’s tax department wrote to several publishers requesting money owed for VAT on adult colouring books after companies filed their end-of-year returns.

Print books and children’s colouring books are currently exempt from VAT, but it is understood that HMRC is challenging the idea that adult colouring books and dot-to-dot titles, where some pages can be pulled out, can be classed as a book. HMRC also believes adult colouring books could be classed as 'uncompleted' books, which currently attract the full 20% rate of VAT, The Bookseller understands.

Publishers with guidance from the Publishers Association (PA) are in talks with the tax department to try and resolve the issue.

In the mean time, Laurence King, m.d and founder of Laurence King Publishing (LKP), who published the highly successful Enchanted Forest colouring book for adults by Johanna Basford, told The Bookseller he was going to VAT-rate the titles while the company awaits a decision from HMRC.

He said: "I strongly support the position of the PA that all colouring books should be classified as books, not stationery, and therefore not subject to VAT. Many people just buy them for their beauty without thinking of colouring them in, much as they buy coffee table books. Further, it seems illogical that, for example, crossword puzzle books and Sudoku should be VAT exempt but adult colouring books are not."

He added: "To simplify the situation for retailers…going forward LKP will be publishing under the assumption that colouring books aimed at adults are VAT-liable for the time being, with their liability to VAT subject to the outcome of the discussions with HMRC."

Meanwhile Michael O’Mara, chairman of Michael O’Mara Books, said: “We and other publishers, following the lead of the Publishers Association, are fighting this decision and we hope that HMRC, on reflection, recognise that they have got this wrong."

If HMRC does ultimately decide VAT is owed on the titles in question, it could cost the industry millions of pounds collectively - adult colouring books sold 3,283,635 copies in 2015 alone worth £20.3m. However, some publishers may argue that all of their colouring titles are primarily aimed at children - and thus remain exempt whatever HMRC's views on the adult range.

A HMRC spokesperson confirmed the department was meeting with publishers soon to discuss VAT on adult colouring books.

"There's been no change to the rules. Children's colouring books are entirely free of VAT and there are no plans to change that. We are meeting with publishing representatives shortly to discuss the VAT treatment of adult colouring books," the spokesperson said.

The adult colouring book craze began taking off in early 2015 helping the trade to its first rise in print sales in eight years, up 6.6%, with titles such as Johanna Basford’s Enchanted Forest (Laurence King), and the Harry Potter Colouring Book (Studio Press) selling in high volumes.