Exemption restricted

Following the liberalisation of the UK’s postal services in 2006 TNT Post had been granted a licence to operate a business postal service in the UK.

TNT Post’s supplies were subject to VAT but those of the Royal Mail were exempt under the provisions of VATA 1994 (as amended by the Postal Services Act 2000) transposing the exemption in article 13(A)(1)(a) of the Sixth Directive for services supplied by public postal services.

The company sought a judicial review of Royal Mail’s exemption. The High Court referred the matter to the European Court of Justice for a preliminary ruling as to the meaning of public postal services and if not all such services were exempt what were the criteria for identifying them.

The European Court of Justice said that according to article 13(A)(1)(a) of the Sixth Directive in order to be exempt the service had...