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VAT Treatment of Digital Newspapers Update

Monday 24th February 2020

HMRC has recently appealed against the decision of the Upper Tribunal which found in favour of the taxpayer in the News Corp case and held that its supplies of digital newspapers should be zero-rated for VAT purposes.

Supplies of digital newspapers are treated as standard rated electronic services, and News Corp argued that its supplies of digital newspapers should also attract the same VAT liability as its supplies of hard copy newspapers and be zero rated. The UT agreed and found that its supplies of digital newspapers should be zero-rated for UK VAT purposes under Item 2, Group 3, Schedule 8 of VATA 1994.

It is possible therefore that this decision could apply zero rating to all supplies of electronic books and magazines. However, given HMRC’s appeal to the Court of Appeal, it may be some time before the definitive position is known. Whilst the VAT liability of supplies of electronic books, magazines and newspapers will remain unchanged, it may be appropriate to submit protective claims pending the final outcome of the appeal.

HMRC has issued Revenue and Customs Brief 2020/1 in which they confirm that HMRC’s VAT treatment of supplies of digital newspapers and other digital publications has not changed following the UT decision and explains how organisations can submit claims for overpaid VAT and protect their position if they want to.

Where an organisation considers that the decision in News Corp applies to its own supplies of digital publications it should provide HMRC with full details in writing, including:

  • a full description of the supplies for which the claim is being made and which item of Group 3 of Schedule 8 the supplies fall;
  • clear reasons why it is considered that the claim should be treated in the same way as the supplies in the News Corp Upper Tribunal decision;
  • a breakdown of the amounts of overpaid VAT being claimed by prescribed accounting period and the method by which they have been calculated

A claimant must be able to give, on request, copies of documentation used in the calculation of a claim. If insufficient information is given in support of a claim it will be rejected and the organisation will need to resubmit its claim with the requisite information.

As HMRC’s policy continues to be that supplies of digital publications are standard rated, HMRC will issue a decision to reject the claim. In order to protect its right to claim overpaid VAT an organisation will be at liberty to appeal HMRC’s decision.

All claims will be subject to the four year time limit in s.80(4) VATA 1994. Once the litigation in News Corp has concluded, appeals will be considered in line with normal procedures. They may also be subject to consideration of unjust enrichment.


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

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