UK and International Tax news

HMRC Issue Guidance on The VAT Treatment of Electronic Publications

Monday 11th May 2020

Following the March 2020 Budget announcement by the Chancellor, HMRC have issued guidance on the extension of zero rating to digital publications, in line with their physical counterparts.

HMRC confirms in their guidance that electronically supplied products including books, booklets, brochures, pamphlets, leaflets, newspapers, journals and periodicals including magazines, children’s picture and painting books, are now eligible for the zero rate of VAT.

Items that are not included in the publications eligible for the zero rate of VAT are those where more than half of an e-publication is devoted to advertising, audio or video content. Such a supply will be standard rated for VAT purposes. HMRC give the example of where an auction house sells e-brochures containing information about lots in a forthcoming auction. Since the e-brochure is predominantly advertising, its sale is standard rated.

The extension only applies to the supply of electronic versions of books already zero rated in UK law. As such, zero-rating is limited to electronic versions of books that can be read or looked at. Supplies of audiobooks remain taxable at the standard rate whether supplied in a physical or digital format. For example, where a business supplies an e-audiobook that is narrated by a well-known actor. It is designed only to be listened to. Since this e-audiobook is wholly devoted to audio content, its supply will be standard rated for VAT purposes.

Supplies of intellectual property, even if they are supplied electronically, are not supplies of e-publications and are always standard rated. In addition, electronically supplied plans or drawings for industrial, architectural, engineering, commercial or similar purposes are specifically excluded in the legislation.

Where a transaction consists of more than one element, for example where a zero rated e-publication is supplied together with something else, it is necessary to determine whether the supplier is making a single supply or multiple supplies. The suppler makes a single supply where one element of the supply is the principal element to which all other elements are ancillary. Whilst the supplier makes multiple supplies where the various elements of the supply are distinct and independent.

Indicators of a single supply include a single price, the supply is advertised as a package, the components are not available separately, the components are supplied at the same time and the customers perceive that what they are getting is a single supply.

Multiple supplies arise where two or more elements are distinct and independent and these may include separate pricing or invoicing, the items are available separately, there is a time differential between parts of the supply, or elements of the supply are not inter-dependent or connected.

Where a business offers its customers access, by subscription, to an e-newspaper and a printed newspaper, as the e-newspaper and printed newspaper are both zero rated, the subscription will be zero rated for VAT purposes.

If a business offers to sell an e-audio book and a printed book at a discounted price, as  both products are available to be purchased separately and the elements of the supplies are not inter-dependent, there are two separate supplies with one of a standard rated audio book and the other of a zero rated book.

HMRC’s guidance also confirms that as e-book readers are one form of hardware to which e-books can be downloaded before being read but are not in themselves e-books, supplies of e-book readers are standard rated (unless they meet certain conditions and are sold as part of an assistive technology system)

Where software, such as an ‘app’, is used to access e-publications, it is not in itself an e-publication and therefore, supplies of such software are standard rated.

The changes were originally intended to take effect from 1 December 2020. However, following the outbreak of the COVID-19 pandemic the date has been brought forward to 1 May 2020.


If you would like more details on the above, please contact Keith Rushen on 0207 486 2378.

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