HMRC publish RCB 6 (2023) on the VAT liability of digital publications
13 June 2023| CATEGORIES: digital newspapers, HMRC, Supreme Court, VAT rates| TAGS: HMRC, VAT
HMRC have published RCB 6 (2023) which provides an update on the VAT treatment of digital publications following the Supreme Court judgment in the News Corp UK & Ireland Ltd case.
Background
Supplies of newspapers are zero-rated under UK legislation (Item 2, Group 3, Schedule 8 Value Added Tax Act 1994). This legislation has been in place since VAT was introduced in the UK in 1973.
Before 1 May 2020, when a new zero rate for supplies of certain e-publications was introduced, HMRC’s policy was based on UK legislation. This stated that the zero rate only applied to the sale of printed matter — that is, supplies of goods. Therefore, before 1 May 2020, the sale of digital newspapers, which are services, has always been standard rated.
The News Corp case
News Corp challenged HMRC’s policy and submitted claims for VAT which it claimed had been overpaid on income it received for granting access to digital versions of several of its publications. It claimed that these digital versions were zero rated since they fell within the ordinary meaning of newspapers and that to treat them differently would breach the principle of fiscal neutrality. This principle requires that supplies of similar goods and services be treated consistently for VAT purposes.
HMRC rejected these claims on the basis that VAT had been correctly accounted for at the standard rate. News Corp appealed HMRC’s decision, and the case went all the way to the Supreme Court. The Supreme Court unanimously dismissed News Corp’s appeal and confirmed that supplies of digital publications before 1 May 2020 are standard rated. See our earlier blog article for a full analysis of the case.
Revenue and Customs Brief 6 (2023)
HMRC have now published Revenue and Customs Brief (RCB) 6 (2023) which replaces Revenue and Customs Brief 3 (2021).
Following the Supreme Court decision, HMRC is now in the process of writing to organisations that have submitted claims for overpaid VAT based on the earlier Upper Tribunal decision in News Corp. This is to establish whether they intended to proceed with their appeals given the Supreme Court decision.