VAT liability of digital publications

HMRC has issued a Revenue & Customs Brief following the recent Upper Tribunal decision in News Corp UK and Ireland Ltd. We commented on this case in our VAT & Charities Newsletter.

Upper Tribunal decision

The Upper Tribunal found that the supply of digital newspapers in this case were zero-rated. Key findings of the Upper Tribunal can be summarised as follows:

  • The zero-rating provisions for books and other printed matter is not limited to goods and can include services (such as digital publications).
  • The digital newspapers were essentially the same as their printed counterparts.
  • Legislation should reflect and keep up-to-date with technological advances (the ‘always speaking’ doctrine).

Constable VAT believe that the findings of the Upper Tribunal support the argument for zero-rating other electronic publications.

HMRC’s policy in relation to digital publications

  • Despite the ruling by the Upper Tribunal, HMRC maintain that supplies of digital publications are subject to VAT at the standard rate.
  • HMRC has been granted permission to appeal the Upper Tribunal’s decision to the Court of Appeal.
  • Revenue & Customs Brief 1 (2020) states HMRC’s policy that any claims made in reliance of the Upper Tribunal’s decision in News Corp will be rejected.

In light of the four year time limit on submitting retrospective VAT refund claims, Constable VAT would encourage any VAT registered charities and businesses that currently treat digital publications as standard rated to consider the submission of protective VAT refund claims. Please do not hesitate to contact Constable VAT on 01206 321029 or email to discuss this further. We would be happy to assist with the submission of protective claims.