HMRC issues revised guidance relating to zero rated print and postage and delivery charges

New rules on VAT arrangements for postage and single-sourcing come into effect on 1st August 2015. Following lobbying efforts by the DMA and Charity Tax Group companies, mainly charities, now have until that date to change their arrangements

Following extensive negotiations with the DMA and the Charity Tax Group (CTG) HMRC has published updated versions of their guidance notes VAT Notice: 701/10 zero-rating of books and other forms of printed matter and VAT Notice 700/24: postage and delivery charges .

The updated guidance clarifies HMRC’s position on the VAT treatment of other services that may be provided together with zero rated print and as we’ve previously advised will come into effect from the 1^st August 2015.

We’re pleased that despite initial reluctance HMRC have accepted the arguments that the DMA and CTG made to widen the scope of data services that can be included as part of a zero rated supply of print to include suppressions such as MPS in addition to address correction. The significance of this is that the costs of all the data work required to meet postal operators’ requirements – including Advertising and Responsible Mail – can also be zero rated if supplied with zero rated print.

The updated guidance however also highlights that under certain circumstances a supplier providing Direct Marketing services such as list buying or targeting together with zero rated print could be assessed as providing a “single supply” of a Direct Marketing service. This would mean that the whole supply – including the zero rated print – would become subject to VAT at the standard rate of 20%!

The DMA has prepared a brief guide to the implications of the updated guidelines here or contact the Legal helpdesk.