VAT – Postal services
HMRC have confirmed that changes to the VAT exemption for postal services came into effect on 31 January 2011. Following this change a number of postal services supplied by the Royal Mail are now subject to VAT. The changes follow 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.
The standard rate of VAT will apply to all postal services which are either:
- Not subject to any price and regulatory control
- Individually negotiated
These services include:
- Parcelforce services
- Door-to-door (unaddressed mail)
- Mailroom services
- Data management services