Later this year we intend to print, promote and sell an annual handbook for the construction industry of construction costs in the UK. A printed, semi hard backed book posted out to subscribers each year. It is a compilation of current costs and as these change regularly we provide free of charge access to a website which is updated each three months to provide current cost information. This online service is not available on its own and is rather like Glass's guide for the motor trade is just a compilation of costs.
Our problem is what is subject to VAT? The book is zero rated but it is difficult to find out how the online portion is treated, and to get it wrong is a nightmare we would rather not visit - retrospectively.
There is a similar product in a slightly different sector which works the same way, an annual hand book which includes an update service on line. This book and online service is zero rated and is a mirror of what we will do. Previously this other publication was provided with a CD being sent out each six months which contained the updates. It would appear that as this was a physical item it was subject to VAT which was charged.
As we will be supplying mainly VAT registered business the charging is not a problem in its own right but we anticipate doing similar things into other EU countries. All subscriptions and mailings will emanate from the UK and if subject to VAT we would be required to take the VAT national number from each application, checking against the EU or HMRC database to establish validity of each application (if it is a duff number we would become responsible) and he idea of using a Bulgarian debt collection agency does not fill us with glee! As the online service is, in our eyes free and is only available with handbook subscriptions it appears to us to be clear that it all should be zero rated. HMRC were not over helpful and I suppose they do not get too many calls from people wanting to pay more - Starbuck excluded. Has anyone any comments or good ideas. Help will be much appreciated.