Policy paper

VAT liability of digital publications 바카라 사이트” Supreme Court decision in News Corp and Ireland Ltd

Published 8 June 2023

Purpose of this brief

This brief gives an update on the VAT treatment of supplies of digital newspapers and other digital publications before 1 May 2020. It follows the Supreme Court decision in News Corp UK and Ireland Ltd ([2023] UKSC 7) released on 22 February 2023.

It also explains that HMRC will be writing to organisations that have submitted claims for overpaid VAT based on the Upper Tribunal decision in News Corp (UT/2018/0046). This is to confirm whether they intend to proceed with their appeals given the Supreme Court decision.

This brief follows on from Revenue and Customs Brief 3 (2021). It has no impact on the 바카라 사이트바카라 사이트™s introduction of a new zero rate for supplies of certain digital publications, including e-newspapers, which came into effect from 1 May 2020.

Who needs to read this

Organisations that make supplies of digital publications and their advisers.

Background

Supplies of newspapers are zero-rated under UK legislation 바카라 사이트” Item 2 of Group 3 of Schedule 8 to the Value Added Tax Act (VATA) 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, HMRC바카라 사이트™s policy was based on UK legislation. This stated that the zero rate only applied to the sale of printed matter 바카라 사이트” that is, supplies of goods. Therefore, before 1 May 2020, the sale of digital newspapers, which are services, has always been standard-rated.

News Corp challenged HMRC바카라 사이트™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 is the principle which 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.

The Supreme Court decision

The Supreme Court unanimously dismissed News Corp바카라 사이트™s appeal. The judgment found that under the EU legal constraints imposed by the 바카라 사이트˜standstill provision바카라 사이트™ and the principle of 바카라 사이트˜strict interpretation바카라 사이트™, the 바카라 사이트˜always speaking doctrine바카라 사이트™ could not be applied to interpret newspapers in Item 2 of Group 3 as including digital newspapers prior to 1 May 2020.

The 바카라 사이트˜standstill provision바카라 사이트™ contained in Article 28(2) of EU Directive 77/388 (the Sixth Directive) meant that the UK zero rates could not be extended beyond those which existed on 31 December 1975. Therefore, the starting point was the ordinary meaning of newspapers in 1975. Their Lordships found that the defining characteristics were news communicated through the medium of print in a physical format. As with the other items in Group 3 of Schedule 8 to the VATA 1994, they were physical and fell to be supplies of goods.

In considering the application of the 바카라 사이트˜always speaking doctrine바카라 사이트™, which may apply when there is a new state of affairs that is not different in kind or dimension 바카라 사이트” for example, technological developments 바카라 사이트” Their Lordships concluded that the differences between newspapers in 1975 and digital newspapers are clear.

Given the differences between printed newspapers and digital newspapers and the finding that digital newspapers were standard-rated, the principle of fiscal neutrality did not apply.

HMRC policy in relation to digital publications

The Supreme Court judgment confirms HMRC바카라 사이트™s policy that supplies of digital publications before 1 May 2020 are standard-rated.

Cases stood behind News Corp

Due to 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. This is to establish whether they intended to proceed with their appeals.