Disappointing news for News Corp, the owner of The Times, The Times on Sunday, The Sun and The Sun on Sunday; they’re not entitled to an over £35 million VAT recovery.

News Corp had contended that the digital editions of their publications were ‘newspapers’ for the purposes of the VAT act and could therefore be sold to customers with a zero rate of VAT.  The First-tier Tribunal disagreed but the Upper Tribunal (UT) did agree and awarded the handsome recovery.  HMRC subsequently appealed the UT decision and the Court of Appeal sided with HMRC.  News Corp then appealed to the Supreme Court (“SC”).

On review of the case the SC confirmed that exceptions to the broadly construed general charging provisions of VAT legislation should be construed narrowly and that newspapers are physical goods distinctly different from digital editions that are a service.  The legal principle of “always speaking”, where legislation is construed while considering changes, including technological changes, that have taken place since legislation was initially drafted, was not relevant.  According to the SC; digital editions are significantly different from future fish & chip wrapping paper.

The decision can be found at: News Corp UK & Ireland Ltd (Appellant) v Commissioners for His Majesty’s Revenue and Customs (Respondent) – The Supreme Court

This is sad news for News Corp but there is little reason for the general public to despair.  From 1 May 2020 Parliament has extended zero-rating on newspapers “when supplied electronically”, subject to exceptions.

Determining whether supplies are standard-rated, reduced rate-rated, zero-rated or exempt can be problematic, but this is a matter that we are experienced with.  The cut-off between the varying rates or exemption points can be difficult to identify.  Please let us know if you would like assistance with determining the VAT treatment of transactions or if you have compliance related issues.