Supreme Court confirm e-newspapers were standard rated

In News Corp UK & Ireland v HMRC [2023] UKSC7, the Supreme Court (SC) found electronic versions of newspapers were standard rated for VAT purposes prior to 1 May 2020.

• News Corp is the publisher of both printed and electronic newspapers, including The Sun and The Times.
• It contended that supplies of its digital newspaper editions made between 2010 and 2016 should be given the same treatment as Printed Newspapers and therefore zero rated for VAT.
• HMRC argued that the legislation only allowed for the zero-rating of goods (i.e. printed newspapers) and therefore excluded services such as digital newspapers.
• Following an unsuccessful Appeal to the First Tier Tribunal, the Upper Tribunal (UT) found for News Corp.
• HMRC’s onward appeal to the Court of Appeal overturned the UT decision finding that electronic versions of newspapers should be standard-rated.
• News Corp appealed to the SC.

The SC found:

• Exemptions should be interpreted strictly, but not as to deprive the exemption of its intended effect.
• The definition of ‘newspaper’ in the legislation could not be extended to include digital editions as:
  • While the ‘always speaking’ principle (that legislation should be interpreted to adapt to changes that have occurred since the legislation was enacted) could potentially extend the meaning of ‘newspaper’ to include digital editions.
  • That principle was heavily restricted by the ‘standstill’ provisions in EU law which limited the way in which legislation could be extended after 31 January 1975.
  • The Lords commented that the VAT landscape was a ‘chequerboard’ which treated cases differently without clear principled reasons for doing so; oranges being zero rated and orange juice being standard rated was given as an example. This limited the way in which the legislation could be interpreted purposively.
  • The method of delivery, digital, was important to the analysis. E-newspapers are not newspapers even though the underlying news content is the same.

The appeal was dismissed.

Comment

• This decision affects supplies made by News Corp in the VAT periods September 2010 to June 2014 and 28 January 2013 to 4 December 2016.
• From 1 May 2020, the legislation was amended to ensure that e-books, e-newspapers, e-magazines and academic e-journals are entitled to the same VAT treatment as their physical counterparts. 

Useful guides on this topic

A beginner's guide to VAT
VAT: Where do I start? What is VAT? Who has to register for VAT? What rate should you charge? How do you calculate VAT? When are your VAT filing obligations?

Books and Printed Matter
What are the VAT rules on books and printed matter? What about e-publications?

Goods or services for VAT?
What are goods and what are services for VAT? The answer may have an impact on the time of supply, the place of supply and in some cases the rate of the supply. The answer is not always as straightforward as it may seem.

Appeals: VAT
The process of making a VAT appeal largely follows that of direct taxes, however, there are some differences.

Correcting VAT errors
What are the time limits? Can you do it through the VAT return? Do you have to notify HMRC?

News Corp e-newspapers were standard rated for VAT
In HMRC v News Corp UK & Ireland Limited [2021] EWCA Civ 91, the Court of Appeal reversed the decision made by the Upper Tribunal (UT), finding that electronic versions of newspapers should be standard rated for VAT.

External links

News Corp UK & Ireland v HMRC [2023] UKSC7