VAT – Postal services
HMRC have issued a new Revenue & Customs Brief (19/10) entitled ‘VAT: postal services – claims for Input Tax’. The introduction of this brief follows the European Court of Justice’s (ECJ) decision in TNT which challenged the Royal Mail’s eligibility to be the only provider of postal services to be exempt from VAT.
The ECJ broadly confirmed that the Royal Mail as the UK’s public postal service is the only body that can benefit from the VAT exemption for postal services. However, the ECJ also ruled that VAT should be applied where the Royal Mail individually negotiates prices or provides services which are not subject to price controls or regulatory issues.
This includes services such as:
- Individually negotiated services
- Parcelforce services
- Door-to-door (unaddressed mail)
- Mailroom services.
The Chancellor announced that these (and other similar services) will be subject to VAT with effect from 31 January 2011.
The Brief published by HMRC includes guidance for businesses affected by the changes to make VAT claims. A number of businesses have already lodged ‘fleming’ type claims. Other businesses may still make claims although subject to the usual four year time limits.