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UK: VAT treatment of digital newspapers (Upper Tribunal decision)

UK: VAT treatment of digital newspapers

The UK Upper Tribunal decided that digital newspapers could be zero-rated for value added tax (VAT) purposes.


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The case is: News Corp UK and Ireland Ltd v Revenue and Customs: [2019] UKUT 404 (TCC)


At issue was the VAT treatment of digital newspapers.

EU Directive rules historically provided that e-services may not be subject to a reduced rate of VAT; however, this rule was changed in December 2018 to permit a reduced rate for e-books and newspapers, etc. HM Revenue & Customs (HMRC) argued that this change to the EU Directive therefore meant that any reduced rate (including the zero rate) could not legally apply to these e-supplies before the date of that change. Under the “standstill provision” of the EU Principle Vat Directive (PVD), the UK was not permitted to extend the scope of any zero-rate reliefs beyond what applied in 1991.

The First Tier Tribunal found for HMRC. The taxpayer appealed, and on appeal, the relevant issues asserted by the taxpayer were:

  • Whether the digital issues were “newspapers” within the meaning of Schedule 8 Group 3 Item 2 of the Value Added Tax Act 1994 (VATA); and if not 
  • Whether fiscal neutrality nonetheless required that they be zero-rated

HMRC raised two additional issues:

  • Whether the lower tribunal’s finding that digital editions were similar to printed versions was one which no reasonable tribunal could have reached; and
  • Whether the lower tribunal’s decision was supported on the grounds that the taxpayer’s case was inconsistent with the PVD (standstill provisions and prohibition on taxing e-services at the reduced rate)

The Upper Tribunal addressed these contentions and concluded that digital newspapers could be zero-rated.

Read a January 2020 report prepared by the KPMG member firm in the UK

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