We are wary about paying VAT following the new policy paper from HMRC. I work for a charity who has used direct marketing in the past. We have always paid standard rate VAT on any telemarketing aspect of these services. The guidance says that we can gain transitional relief on "the supply of printing and mailing of zero-rated marketing material to recipients based on data provided by the customer In practice, the Charity provides list but also buys in "cold lists". I assume we should only be paying standard rate VAT on the cold list, and even then only on the ancillary element (distribution etc) and not the actual print or postage?
Please help. Confused!
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You are very confused
The general treatment for direct marketing services that includes the printing of the delivered matter is that they are standard-rated. Such services have always been standard-rated, but some suppliers have been zero-rating the supply.
R&C Brief 10 deals with the position where these have incorrectly been zero-rated BY THE SUPPLIER prior to 1 August 2015.
Telemarketing would, however, be unaffected by R&C Brief 10; being neither addressed mail nor unadressed mail.
But that is the general treatment; charities are a special case, and supplies are zero-rated to the extent that they consist of the promulgation of an advertisement by means of a medium of communication with the public. This does not, however, include telemarketing and direct mailings, in HMRC's view. See http://www.hmrc.gov.uk/manuals/vcharmanual/VCHAR11000.htm
If you are spending substantial sums on promotional activity, you might be well advised to pay for some consultancy.