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The charity sector has been buoyed by the publication of fresh HMRC guidance on the VAT treatment of supplies of direct marketing.
The move comes in light of criticism from charities of unclear Revenue information following a policy change that meant printing and delivery of mail packs would no longer be zero rated
The charity sector has been buoyed by the publication of fresh HMRC guidance on the VAT treatment of supplies of direct marketing.
The move comes in light of criticism from charities of unclear Revenue information following a policy change that meant printing and delivery of mail packs would no longer be zero rated
A new business brief explains the tax department’s approach to marketing material that has been wrongly treated as zero-rated supplies of delivered goods.
HMRC accept there have been occasions when what is to be treated as a zero-rated supply of delivered goods or a standard-rated service has been misunderstood based on VAT Notice 700/24: Postage and Delivery Charges – which has been updated along with VAT Notice 701/10: Zero-Rating of Books and Other Forms of Printed Matter.
A transitional period ends on 31 July for businesses that treated supplies of direct marketing incorrectly for VAT. The Revenue will not take retrospective action for supplies made before 1 August where the supplier has zero rated a separate single supply consisting of either addressed or unaddressed mail only.
Suppliers that wish to adopt the transitional arrangements must contact the tax authority no later than 30 November.
The chair of the Charity Tax Group, John Hemming, said his organisation continued to disagree with the Revenue’s approach but was happy that its negotiations with the department “led to the production of clear guidance, which provides much needed certainty and clarity for charities, saving them millions of pounds in the process.”
Hemming was welcomed the scope and length of the transitional arrangements, which he said were “practical and workable for charities”.
He added, “It is important that print companies are made aware of the scope of HMRC’s transitional arrangements and the time limit for claiming the retrospective concessions. We have produced a standard letter for charities to use to protect their position.”
