The DMA urges HMRC to take a fairer approach to VAT

The DMA and the Charity Tax Group (CTG) met with senior officials at HMRC to discuss the continuing issues around the inclusion of other elements such as postage as part of a single supply of zero rated print.

The DMA sought HMRC’s agreement on 4 key issues:

1. A moratorium on the past with no retrospective penalties for suppliers or their customers who had included postage as part of a supply of zero-rated print.

The DMA believes that this is fully justified since there is good evidence that many HMRC officials themselves did not understand the published guidelines and HMRC has been very slow in providing the clarification that the DMA requested.

2. A realistic timescale for implementation given that Christmas campaigns are underway and companies need time to make alternative arrangements or renegotiate contracts. The DMA has suggested a fair date would be April 2015.

Not only would this allow time for HMRC to publish revised guidance and publicise it to the industry but it would also allow time for a company to challenge HMRC's position if they believe that it is incorrect.

3. Confirmation that data-processing required to make the print suitable for mailing could be included as part of a zero-rated print supply. This does not cover data-processing that was not required for mail such as selections and targeting.

4. Confirmation that a company could still supply print and postage as two separate supplies - one zero-rated the other standard rated. The latest HMRC letter seemed to imply that if you supply both you are automatically providing an advertising service.

Although we at the DMA have not yet received an official response from HMRC, we believe that we reached agreement on points 3 and 4, but HMRC wanted more time to consider the first two points.

In relation to our request for a moratorium, HMRC asked for more evidence of “misdirection” – in other words any written confirmation from HMRC which said that including postage as part of a zero-rated print supply was acceptable.

If any members do have any letters like this with HMRC providing clearance it would strengthen our case if you were prepared to let these be used as evidence and email them to the DMA.

Any evidence sent to the DMA will not be submitted to HMRC without your permission and, if requested, can be submitted anonymously with company and client names redacted.