March 12, 2020: Does your organisation provide paid-for digital publications? And have you been accounting for VAT on part of the subscription? If the answer to those questions is ‘yes’, you may be able to claim back up to four years of VAT. But you need to act fast.
The good news for digital publication producers follows a recent decision by the Upper Tribunal (Tax & Chancery Chamber) that electronic newspapers should have the same VAT status as hard copy newspapers and be zero-rated.
It was also announced in yesterday’s Budget that the UK VAT legislation will be changed to zero-rate certain e-publications with effect from December 2020, but claims can still be made for the past four years based on the ruling. This planned change may mean you can lower your subscriptions going forward.
Although the Upper Tribunal decision came from a case brought by News International, it can be applied by all taxpayers who are in a similar position. And while the News International case was specifically about electronic versions of newspapers, there is no reason the decision should not also apply to other types of electronic publications such as newsletters.
The decision means that if you have accounted for VAT on e-publications you may be able to make a claim to HMRC for the VAT you have paid on them. Any claim will be limited to the VAT you have paid in the past four years – and interest will be paid on top.
You will need to show you have covered the cost of the VAT yourself and have not passed it on to your members, which would have happened if you increased your subscription to cover VAT when you started issuing e-publications.
HMRC has appealed against the decision and will not be making any repayments immediately. HMRC is therefore likely to reject your claim, so to protect your interests you will need to lodge an Appeal with the Tax Tribunal.
It is important you submit your claim to HMRC as soon as you can because if you wait until the final judgment in the case, which may be some years away, you will only be able to go back four years from that date. If you make a claim now, you can go back four years from today.
WHAT YOU SHOULD DO NOW
Talk to the charities and tax specialists at Harwood Hutton and we can guide you through this VAT reclaim process. We will start by confirming if your publications are covered by the decision before moving on to quantifying your claim, lodging it with HMRC and then, if necessary, lodging an Appeal to the Tribunal.
Call Harwood Hutton on 0203 954 6690 (London) or 01494 739500 (Beaconsfield) or email:
Anna Bulmer, charities accounting specialist
Michael Ashdown, Head of VAT
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