VAT & Direct Marketing Costs – Why Charities need to act now
28th July 2015
With the holiday season upon us it’s all too easy to miss out on the “minutiae” of VAT management I appreciate, so here’s a quick postcard to highlight an issue which could come back to haunt a charity if not addressed.
HMRC have issued a new policy paper to outline the VAT treatment of Direct Marketing Services using printed matter which is a long way of saying “mailshots”.
The problem springs from the fact that whilst the production of printed matter is a supply of goods which can benefit from the zero rate of VAT on the supply of a charity leaflet or newsletter, HMRC clearly see the services of sending that mailshot out as a service subject to the standard 20% VAT charge. The issue is that often all of these activities are bundled together and some suppliers had treated the whole supply to the charity as being zero rated whereas HMRC believe it should have been standard rated in total.
This difference of opinion has been a cause for great concern in the Third Sector as the exposure to charities ran into the millions.
What has been accepted now is that such a single supply of direct marketing services do, and should always, attract a 20% VAT charge but HMRC will not undertake any retrospective assessments for VAT undercharged by marketing suppliers as long as they specifically write to HMRC to make a disclosure about these supplies.
In what is termed as “transitional arrangements” HMRC will not take retrospective action for incorrectly zero rated supplies made in the period up to 1 August 2015 as long as the supplier notifies them by post or email by 30 November 2015.
It would be important for any charity that has received zero rated supplies of direct marketing services involving printed matter from suppliers in the period up to 31 July 2015 to ensure that the supplier has taken advantage of this transitional arrangement so as to mitigate the risk of later receiving an invoice from them for the VAT missed off past supplies.
Liz Maher: Director Centurion VAT Specialists Ltd
Centurion was founded in 1998 and since then it has grown to include five senior level VAT practitioners who have expertise in sectors including education, third sector, housing associations and manufacturing. The team was awarded the Taxation Best VAT UK VAT Team in 2013.
Tories plan VAT tax bombshell after election - hitting struggling families with financial blow - Mirror.co.uk
21 April 2017 20:17
Could a tax on meat help us save the planet? - The Guardian
21 April 2017 05:50
UK lost up to £1.5bn from VAT evasion by foreign online retailers - Financial Times
19 April 2017 16:22
Investment Trusts Lose VAT Battle In UK Supreme Court - Law360 (subscription)
11 April 2017 19:44
Reality Check: Do Labour's sums add up on free school meals? - BBC News
6 April 2017 18:31
VAT on fees? Our greedy private schools have it coming - Spectator.co.uk (blog)
6 April 2017 08:35
Criminal gangs use UK ports to defraud EU customs - BBC News
5 April 2017 20:03
Uber faces big VAT bill if tax campaign wins in UK court - International Tax Review
30 March 2017 16:52
More on the UK Government consultation that marketplaces collect VAT - Tamebay
30 March 2017 08:34
UK Considers Response To Construction Industry VAT Fraud - Tax-news.com
29 March 2017 16:13