We previously provided an article about the possible zero rating of digital newspapers following the Upper Tribunal decision in the case of News Corp UK & Ireland Limited ( UKUT 0404 (TCC). As we suspected, HMRC has now issued Revenue & Customs Brief 1 (2020) to confirm that its policy has not changed following this decision. This continues to be that supplies of digital publications are standard rated.
HMRC has been granted permission to appeal the Upper Tribunal decision to the Court of Appeal. The Brief also explains how organisations can submit claims for overpaid VAT and protect their position if they wish to do so.
As HMRC’s policy has not changed, any claims made in reliance of the decision in News Corp will be rejected, but that doesn’t prevent taxpayers from protecting their position as they will be able to appeal HMRC’s decision. These appeals will then be considered once the outcome of the News Corp litigation is known.
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 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.
All claims will be subject to the four year time limit in s80(4), Value Added Tax Act 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.
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.
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.