The Charity Tax Group (CTG) has expressed its disappointment that HMRC has not published the revised guidance on the VAT rating of charities’ direct mail supplies that HMRC promised would be issued ‘in the new year’.
HMRC had previously announced that, from 1 October 2014, zero rating would only apply to the production of direct marketing material, rather than the entire package. HMRC subsequently agreed to postpone the change until 1 April 2015, having accepted that its original guidance was unclear.
CTG chairman, John Hemming, said: ‘HMRC has failed to publish guidance on VAT and direct mail, and failed to resolve outstanding concerns that the retrospective concession, which we negotiated, has been narrowed to exclude unaddressed mailings and data correction services in direct contradiction to earlier promises. It is unsatisfactory that charities have to operate according to new rules from 1 April without formal notice from HMRC of their responsibilities.
‘In the light of HMRC’s refusal to discuss matters further, the only course of action open to CTG is to publish the exchange of correspondence with HMRC and to warn our members to:
take note of HMRC’s letter (and the HMRC guidance when it is finally published) but bear in mind that there are points that are not fully dealt with;
talk to their mailing providers/professional advisers;
stop treating services of print and delivery of charity mail packs as a composite zero rated supply of delivered goods;
consider instructing print companies to arrange for all delivery services to the charity’s targets to be provided as an agency disbursement; and
contact CTG if HMRC attempts to assess VAT retrospective unaddressed mail services and data manipulation services (involving suppressions, as well as correction of names, addresses and postcodes) which were required to meet the mail operator’s contractual standards as, in our view, these should be treated as being ancillary. Charities need to be aware that where such VAT is assessed, the print company may seek to charge the VAT on to their charity clients if there are VAT exclusive clauses in contracts.’
The Charity Tax Group (CTG) has expressed its disappointment that HMRC has not published the revised guidance on the VAT rating of charities’ direct mail supplies that HMRC promised would be issued ‘in the new year’.
HMRC had previously announced that, from 1 October 2014, zero rating would only apply to the production of direct marketing material, rather than the entire package. HMRC subsequently agreed to postpone the change until 1 April 2015, having accepted that its original guidance was unclear.
CTG chairman, John Hemming, said: ‘HMRC has failed to publish guidance on VAT and direct mail, and failed to resolve outstanding concerns that the retrospective concession, which we negotiated, has been narrowed to exclude unaddressed mailings and data correction services in direct contradiction to earlier promises. It is unsatisfactory that charities have to operate according to new rules from 1 April without formal notice from HMRC of their responsibilities.
‘In the light of HMRC’s refusal to discuss matters further, the only course of action open to CTG is to publish the exchange of correspondence with HMRC and to warn our members to:
take note of HMRC’s letter (and the HMRC guidance when it is finally published) but bear in mind that there are points that are not fully dealt with;
talk to their mailing providers/professional advisers;
stop treating services of print and delivery of charity mail packs as a composite zero rated supply of delivered goods;
consider instructing print companies to arrange for all delivery services to the charity’s targets to be provided as an agency disbursement; and
contact CTG if HMRC attempts to assess VAT retrospective unaddressed mail services and data manipulation services (involving suppressions, as well as correction of names, addresses and postcodes) which were required to meet the mail operator’s contractual standards as, in our view, these should be treated as being ancillary. Charities need to be aware that where such VAT is assessed, the print company may seek to charge the VAT on to their charity clients if there are VAT exclusive clauses in contracts.’
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