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HMRC appeals decision that e-newspapers are zero-rated for VAT

18 February 2020: HMRC is appealing against an Upper Tribunal decision that could halt VAT revenues from electronic publications, ICAEW’s Tax Faculty has confirmed.

On 24 December 2019 the Upper Tribunal concluded digital newspapers should be zero-rated for VAT in the UK, a decision that could conceivably be extended to all supplies of ebooks and electronic magazines.

In the case, News Corp UK and Ireland Ltd v The Commissioners for HM Revenue and Customs, News Corp, the publisher of The Times, The Sunday Times, The Sun and The Sun on Sunday, argued that its supplies of digital newspapers should attract the same VAT liability as its supplies of hard copies and be zero rated.

Currently supplies of digital newspapers are treated as electronic services and are subject to standard VAT liability of 20%. However, the Upper Tribunal concluded that digital newspapers are zero-rated under Item 2, Group 3, Schedule 8 of the Value Added Tax Act 1994.

As HMRC is now appealing the decision it may be several years before it is clear whether electronic publications will be subject to standard rates of VAT or not.

‘It would be unwise at this stage to assume that digitised books, magazines and newspapers will definitely be accepted by HMRC as being zero rated,’ advises Frank Haskew, Head of Tax, ICAEW. ‘We hope that HMRC will issue some form of statement about this issue in the near future, possibly in the form of a Revenue & Customs Brief.’

HMRC’s internal guidance on protective claims can be found in HMRC’s VAT Refunds Manual at VRM10000 and its views on claims resulting in unjust enrichment can be found at VRM12100.

The Tax Faculty advises that clients may seek contingent fees in respect of any refund claims made, but practitioners should be mindful of ethical standards where that client is an audit client. 


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