Where business goods are provided free to a customer, there is deemed to be a supply at cost (VATA 1994, Sch. 6, para. 6). However, this does not apply where the total cost of all the business gifts made to the same person in the same year does not exceed £50 (VATA 1994, Sch. 4, para. 5(2)).
If the total does not exceed £50, there is deemed to be no supply.