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Protective claims for overpaid VAT on digital publications

Rob Warne, Partner, Head of VAT
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Update: HMRC issued Revenue & Customs Brief 1 (2020) in February 2020 confirming that they disagree with the UTT decision and that an appeal is being made. In the interim, organisations should consider whether protective claims for VAT overpaid should be made to guard against VAT time limits.


In the recent Upper Tier Tribunal (UTT) VAT case of ‘News Corp UK & Ireland Limited’, the court ruled in favour of the taxpayer so that zero rating also applies to digital newspapers. The case concerned various digital versions of hard copy newspapers such as The Times and The Sun.

The taxpayer argued that these digital versions were still ‘newspapers’ and were therefore zero rated under VATA 1994 Schedule 8 Group 3 Item 2 as ‘Newspapers, journals and periodicals’.

HMRC was successful in the First Tier Tribunal (FTT) and have always argued that zero-rating only applied to the physical goods so have not allowed the zero rating to be afforded to electronic publications. This has been on the basis that UK Law only refers to goods because it was written before electronic publications could be acquired.

HMRC’s view and the decision of the FTT has now been overturned by a court whose judgement creates legal precedent.

What does this mean?

It means that taxpayers who have been accounting for VAT on digital publications at the standard rate will have the opportunity to submit a claim for overpaid output tax.

What should be done?

Due to the four year statutory limit on adjusting VAT claims and the length of time that may be taken if HMRC are to appeal the decision, our recommendation is that a protective claim is submitted to HMRC going back four years in order to protect any over-paid VAT going ‘out of time’.

We expect that HMRC will appeal against this decision and so the matter is unlikely to be concluded in the near future.  If a claim is not submitted the four year statutory cap will continue to move and taxpayers could lose out if the judgement is ultimately upheld.

For some claims HMRC may argue that ‘unjust enrichment’ applies such that the claim is invalid because it was the ultimate consumer that incurred the overcharged VAT.  In many cases this defence will be able to be rebutted.

Until the dispute is finally resolved and/or HMRC issues updated guidance, we would recommend that taxpayers continue to account for VAT on digital publications and submit further protective claims if necessary.

Further details

Please do not hesitate to contact Robert Warne if you would like to discuss this further.

Contact us

Robert Warne
Rob Warne
Partner, Head of VAT and Customs Duty services