Direct Mail Marketing Services Alert – June 2015

CVC has previously reported on the VAT treatment of direct mail marketing services. In a letter to the Direct Marketing Association (DMA) dated 16 July 2014 HMRC stated that it does not view postage services provided in addition to the production of printed matter as ancillary to the supply of printed matter. Following discussions between HMRC, DMA and the Charity Tax Group (CTG) a broad agreement was reached as to the VAT liability of direct mail marketing supplies. HMRC agreed to postpone the start date from 1 October 2014 to 1 April 2015 allowing time for those affected to implement the changes.

On 9 June 2015 HMRC published revised editions of VAT Notice 700/24 ‘Postage, delivery charges and direct marketing’ and VAT Notice 701/10 ‘Zero-rating of books and other printed matter’.

Notice 700/24 provides that a direct marketing service is a standard rated supply. The supply of printed matter is ancillary to the direct marketing service (e.g. postage and data handling). Therefore, the entire supply is subject to the standard rate of VAT (currently 20%). However, Notice 700/24 comments that where printed matter and any services are supplied separately then that may comprise multiple supplies and each component is taxed according to its VAT liability. An example provided in Notice 700/24 is: A multiple supply occurs where a supplier provides marketing strategy advice to a charity and offers the option, under a separate contract, of printing leaflets. These are multiple supplies, one of standard rated marketing advice and one of zero-rated goods.

Notice 701/10 outlines the ‘package test’; where a package contains more zero-rated than standard rated items the package as a whole may be zero-rated. The package test may reduce the tax burden and be simpler than apportionment.

This is an important change which was effective from 1 April 2015. Charities and not for profit organisations are likely to be incurring additional VAT costs. If the cost does not directly relate to taxable business activities this VAT charge may be irrecoverable and present an absolute cost. Charities and suppliers of direct marketing services may wish to take advice to ensure compliance with the new VAT rules and ensure VAT is not charged, or incurred, in error.






Constable VAT Consultancy LLP (CVC) is a specialist independent VAT practice with a nationwide client base and offices in London and East Anglia. We work together with many charities and not-for-profit bodies ranging from national charities to regionally based organisations.


We understand that charities wish to achieve their objectives whilst satisfying the legal requirements placed upon them. Charities may be liable to account for VAT on supplies made and VAT will be payable on certain expenditure. As irrecoverable VAT represents an absolute cost to most charities, regardless of their VAT registration status, there is a need to review the position regularly and carefully. We offer advice with planning initiatives, technical compliance issues, complex transactions, help with innovative ideas on VAT saving opportunities, and liaising with HMRC.


If you would like to discuss how VAT impacts on your organisation please contact Stewart Henry,  Laura Beckett or Sophie Cox on 020 7830 9669, 01206 321029 or via email on, and  Alternatively, please visit our website at where you can view some of the services we offer in more detail and subscribe to our free general and regular VAT alerts and updates. Visit our website for current news updates. You can also follow CVC on Twitter.


This newsletter is intended as a general guide to current VAT issues and is not intended to be a comprehensive statement of the law. No liability is accepted for the opinions it contains or for any errors or omissions. CVC cannot accept responsibility for loss incurred by any person, company or entity as a result of acting, or failing to act, on any material in this newsletter. Specialist VAT advice should always be sought in relation to your particular circumstance.