A recent Upper Tier Tribunal case has resulted in digital newspapers being judged the same as hard copy printed newspapers and therefore zero rated. Prior to the case, digital publications were seen by HMRC as standard rated.
Whilst the case may be appealed by HMRC, it is worth considering a “protective” claim on HMRC to repay VAT overpaid on such sales.
Apart from those that sell e-newspapers, this ruling may also extend to those publishing e-magazines, e-books, online maps, and newsletters issued digitally as part of a membership package of benefits, such as charities and organisations/associations that issue annual newsletters as part of the membership package of benefits. This latter group may have agreed an apportionment arrangement with HMRC in that some of the annual subscription is applied to a zero rated printed newsletter, but standard rated e-newsletter. Action
If you are aware of any client that issues an e-publication and charges VAT at the standard rate, we should offer to assist them with making a “protective” claim for overpaid VAT. This would entail compiling a voluntary disclosure to cover the past four years in full (if applicable).
Making the claim means that as time moves forward (the case may take years to finalise) the four years are “protected” and do not fall out of time. If e-sales are still occurring we can assist the client by making an annual claim at the end of each year. The claims should be lodged with HMRC with a request to “stand behind” the VAT case until the final outcome is known. If HMRC win the case, the claims can be withdrawn.
If you are affected by this and would like to discuss further, please contact Robert Geary