VAT on promotional schemes: a tide of change?

The case of Associated Newspapers Ltd (ANL) v HMRC focused on whether company in that case (ANL) was able to recover the VAT it incurred on the purchase of vouchers given away to readers as part of a drive to increase the circulation of its newspapers. The Court of Appeal found that where input VAT was incurred, the VAT was recoverable as a cost component of ANL’s fully taxable business, which made supplies of newspapers and advertising services. Furthermore, no VAT was due on the provision of the vouchers as the deemed supply provisions did not apply: the legislative test ‘not for the purpose of his business’ was not met.