Businesses in line for £220m VAT windfall
UK businesses could receive a tax windfall of more than £200m if an attempt to recover VAT on postal services is successful, reports Nick Huber.
Law firm DLA Piper said its application for a lead claim in the first-tier tax tribunal to recover VAT from HMRC has been accepted. DLA reckons that businesses could recover more than £220m of credit for input tax on Royal Mail's postal services if its tribunal appeal on behalf of Zipvit, a vitamin retailer, is successful.
In the past, Royal Mail had treated postal services as exempt under the Value Added Tax Act 1994. However, a previous case brought by TNT determined that the vast majority of Royal Mail services should, in fact, have been chargeable to VAT under the Sixth VAT Directive or Principal VAT Directive, DLA said.