VAT Director Rayner Essex
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VAT: Protective claims for digital publications

The VAT treatment of digitally delivered news is no longer black and white, or indeed read all over, following the News Corp case. Jason Croke discusses whether a protective VAT claim may be required.
13th Mar 2020
VAT Director Rayner Essex
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Media in the UK

As Neil Warren predicted, HMRC has appealed against the upper tribunal decision of News Corp UK and Ireland Ltd v HMRC (UT/2018/0065).

That tribunal concluded that zero rating is not limited to goods (printed matter) but can include services (digital newspapers) on the basis digital/printed newspapers were essentially the same thing: a medium for presenting news.

This could open up an opportunity for all publishers who have digital and paper versions of the same products, to submit claims for VAT overpaid in the last four years.

However, HMRC has recently published Revenue and Customs Brief 01/2020 to explain its view on the case. This brief indicates that taxpayers are welcome to submit retrospective claims, but such claims will be rejected, requiring taxpayers to file an appeal pending the eventual outcome. Any claims may also be subject to unjust enrichment.

Is it worth submitting a claim?

Cases like this drag on for years, such as those concerning Rank plc and Bridport Golf Club. This means VAT refunds are unlikely to be paid quickly, and whether they are paid at all will hinge on whether HMRC ultimately succeeds in overturning the upper tribunal decision.

If HMRC fails to win the argument, then refunds would be due unless HMRC can successfully argue unjust enrichment. If HMRC wins the argument, then further litigation may take place and claims remain in stasis.

As tax advisers, we have a duty to inform our clients of potential risks and opportunities. Provided expectations are clearly set from the beginning, and the timescales understood by all, then a speculative claim protects your client’s position, in the event that HMRC eventually loses. 

How to make a claim

Any claim submitted should be detailed and thorough, with suitable evidence able to support its own argument, just because it is a speculative claim doesn’t mean less effort required. Submitting a claim, appealing it and then monitoring progress takes time and effort, and precision remains key.

It is possible to submit your own claim without external help, but weigh up the cost of engaging a third party and doing this yourself and following through on appealing rejection and your general level of comfort with such matters.

It is therefore important to fully understand the legal nature of the News Corp case and its nuances. There is no reference to books or journals in the News Corp case, although the case concerns itself with VATA 1994, Sch 8  Group 3 which covers newspapers, journals and books.

This means there is not a large leap of logic to extend a claim to matters beyond newspapers but, the more the facts of the claim stray from the tribunal case, the easier it will be for HMRC to resist the claim. 

Unjust enrichment

As a subscriber to one of their newspapers would typically pay the VAT to News Corp, HMRC will argue a refund of VAT would unjustly enrich the supplier (News Corp) as they were never out of pocket.

The counter-argument is that because VAT has been charged wrongly on digital subscriptions, customers have been lost and the supplier has suffered economic hardship. The VAT the refund represents compensation for the loss of customers due to higher prices putting potential customers off, but this would all need to be quantified and evidenced.


News Corp is an exciting case, as it is the first real challenge to the concept that a digital newspaper can be treated in the same way for VAT purposes as its physical relation. It opens up the debate about VAT on e-books too. The Appeal Court will hopefully provide clarity on this issue, in the meantime, a protective claim may be worthwhile.


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