Are times changing for the VAT liability of digital publications ?

9th March 2020

A watershed moment could be upon publishers as a tribunal judge backs News Corp UK & Ireland Ltd, which owns the Times, The Sunday Times and the Sun, to claim zero-rated VAT on digital editions of their newspapers.

Newspaper

The digital formats of the newspapers are currently subject to a 20 percent standard VAT rate. The recent ruling supported the taxpayer's claim that these digital versions were still ‘newspapers’ and were, therefore, zero-rated.

It sets a new precedent for newspapers and magazines offering a digital edition, although HMRC has been granted permission to appeal the decision at the Court of Appeal.

What does this mean?

It is now possible for taxpayers who have been accounting for VAT on digital publications to submit claims for potential overpaid VAT.

This applies to suppliers of such digital publications, although it should be noted that such claims will be subject to ‘Unjust Enrichment’ rules. In simple terms, HMRC must show that the person charged the ‘market rate’ for his supplies of goods or services plus VAT, as opposed to the ‘market rate’ including VAT.

Equally, purchasers of digital publications may also be able to approach their suppliers and discuss whether they will be making protective claims in light of the decision. 

Whilst these claims will not be paid until further litigation is completed (with a potential HMRC appeal pending), submitting a claim now will protect the earlier years from becoming ‘timed out’ under the four-year ruling which covers claims for overpaid VAT.

Who does this affect?

  • Digital publications providers including charities or membership organisations who charge for monthly/quarterly publications.
  • Charities who may have suffered irrecoverable VAT on the purchase of such transactions (including any that are not registered for VAT).

Please contact jessica.mason@hboltd.co.uk or call 01926 422292 for more advice.