February 24, 2020
HMRC has published “Revenue and Customs Brief 1 (2020)” confirming that HMRC’s VAT treatment of supplies of digital newspapers and other digital publications has not changed following the Upper Tribunal decision in News Corp UK & Ireland Ltd v HMRC  UKUT 404 (TCC). It also explains how organisations can submit claims for overpaid VAT and protect their position if they want to.
The brief explains that supplies of newspapers are zero-rated under UK legislation and has been since VAT was introduced into the UK in 1973. HMRC’s policy is that the zero rate only applies to the sale of printed matter (i.e. supplies of goods). Therefore, the sale of digital newspapers (which are services) has always been treated as standard-rated.
In News Corp, the Upper Tribunal held that:
- group 3 of Schedule 8 is not limited to goods and can include services (such as digital publications);
- the News Corp digital newspapers were essentially the same or at least very similar to the corresponding printed newspapers, fulfilling the same legislative purpose, and falling within the same category of items (or “genus of facts”) that UK legislation has always zero-rated;
- the domestic legal principle known as the “always speaking” doctrine is engaged (essentially, that legislation in certain circumstances should reflect and keep up to date with technological advances); and
- the supply of the digital newspapers in dispute fell to be zero-rated within Item 2 (notwithstanding that they did not exist when the zero rates were introduced).
The brief confirms that there have been no changes in HMRC’s policy, which continues to be that supplies of digital publications are standard-rated. HMRC has been granted permission to appeal the Upper Tribunal decision to the Court of Appeal.
As HMRC’s policy has not changed, any claims made in reliance of the decision in News Corp will be rejected. To read the brief in full, click here.