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VAT 'scrapped' for epublications

1 May: The Chancellor has fast-tracked plans to cut VAT on ebooks and online newspapers and they will be zero-rated from today.

The government announced at the Spring Budget that it planned to align digital publications with printed publications and make them zero rated for VAT from 1 December 2020.

However, in a surprise announcement on 30 April, Rishi Sunak announced that the move would be brought forward to 1 May. The Chancellor said the decision had been made in light of the coronavirus pandemic to support the increasing number of people accessing publications online.

He said: “We want to make it as easy as possible for people across the UK to get hold of the books they want whilst they are staying at home and saving lives.

“That is why we have fast tracked plans to scrap VAT on all e-publications, which will make it cheaper for publishers to sell their books, magazines and newspapers.”

The announcement in the Budget came as HMRC was appealing an Upper Tribunal decision which agreed with the case brought by News Corp that its digital newspapers should be charged at the same rate as it’s printed papers.

For organisations now looking to make refund claims HMRC’s internal guidance on protective claims can be found in HMRC’s VAT Refunds Manual at VRM10000 and its views on claims resulting in unjust enrichment can be found at VRM12100.

The Tax Faculty advises that clients may seek contingent fees in respect of any refund claims made, but practitioners should be mindful of ethical standards where that client is an audit client.