Newspapers have always been free from VAT due to their importance in spreading public knowledge, aiding literacy and furthering the democratic process. However, in an important test case, a tribunal has ruled that the exemption does not extend to digital editions that are published online.
The publisher of a number of national newspaper titles had appealed to the First-tier Tribunal (FTT) against HM Revenue and Customs’ refusal to grant VAT rebates in respect of online editions over a period of almost seven years. It was submitted that the online editions were the digital equivalent of newspapers published on paper and were, in every relevant respect, newspapers themselves.
The FTT noted that online newspaper editions are distinct from rolling news services, which update content continuously. The digital and newsprint versions of the relevant titles were similar and both were essentially periodic, edition-based, publications. From the point of view of online subscribers, it was the content of the digital editions, rather than the medium of their delivery, that was of primary importance.
In dismissing the publisher’s appeal, however, the FTT noted that the newspaper exemption from VAT provided by the VAT Act 1994 relates to goods, rather than services. In context, the reference to goods could only mean newspapers, journals and periodicals in physical form. There was no dispute that the digital editions, when supplied to readers, constituted a supply of services. The FTT also rejected the publisher’s plea that the different tax treatment of newspapers and their digital versions offended against the principle of fiscal neutrality.