Zero rating on Electronic e-publication from 1 May 2020

HMRC announced today that with effect from 1 May 2020 the sale of certain e-publications will be subject to the zero rate of UK VAT.

HMRC had originally said that the law change would take effect from 1 December 2020, but the change has been accelerated to reduce the cost of access to online publications during the current COVID-19 pandemic when many people are confined to their homes and schools are closed.

The law changes aligns the VAT treatment of digital versions of printed publications. With effect from 1 May 2020, electronic supplies of the products listed below, unless they are wholly or predominantly devoted to advertising, audio or video content will be zero rated:

Individuals and organisations for whom VAT is a cost will welcome the change in VAT treatment, provided the VAT saving is passed on.

HMRC continue to be of the view that the change in VAT treatment does not apply retrospectively. However, the decision earlier in this year in the Upper Tier Tribunal case of News Corp UK & Ireland Limited calls this into question.

HMRC is appealing that decision, so for now organisations may wish to consider whether they have protective claims to make in respect of VAT wrongly paid to guard against the four year time limits. Claims should be considered by suppliers where VAT has been charged on sales of e-publications.

It will also be relevant where you are a customer for whom the VAT charge has been a cost. In these circumstances you should be contacting your supplier to establish whether you are due a refund of overcharged VAT. In addition a lot of electronic supplies have been received from overseas and you will have accounted for VAT under the reverse charge. Where you have not been able to recover that VAT a four year claim should be contemplated

If you have any further queries please contact Robert Warne or Robert Marchant, or your usual Crowe VAT advisor.