E-publications can be zero-rated and claims need to be made to HMRC by publishers.
The Upper Tribunal has overturned HMRC’s policy on e-publications (such as digital reference books) and said VAT should not have been charged on supplies of them. We reported this in January 2020 (
here) along with a minute-webinar (
here) and publishers have begun to receive claims from their customers for refunds of overcharged VAT.
Publishers need to consider how to respond. There are many questions to address. Is the publisher required to pay refunds to clients and for how many years? Will paying refunds to customers leave the publisher out of pocket or can they redress the position? HMRC has issued Revenue & Customs Brief 1 (2020) stating clearly that HMRC’s policy remains that VAT should be charged on supplies of e-publications and it is appealing the Upper Tribunal decision. The publisher is therefore caught between a rock and a hard place: the customers are asking for their money back, but HMRC is refusing to recognise the zero-rating. What should the publisher be doing?
In short, publishers should be acting now as there are time limits which could see them out of pocket.
For assistance with this issue or with any VAT queries, please contact
Kevin Hall at Markel Tax on
020 3815 8999.