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VAT and Royal Mail postage

Some types of postal services offered by the Royal Mail will be subject to VAT from 31 January 2011.

According to the latest information issued by HMRC

"In broad terms, the proposed changes will mean that any service which is individually negotiated or not subject to any price and regulatory control will become liable to VAT at the standard rate. This includes, but is not limited to:

  • all individually negotiated services
  • Parcelforce services
  • door-to-door (unaddressed mail)
  • mailroom services".

The change follows European Court of Justice Decision known as TNT Post UK Ltd which ruled that the UK has applied the exemption for postal services more widely than was permitted under the special rules which applied to Post Office Mail. HMRC will introduce new legislation to amend the rules from 31 January 2011.

HMRC are currently considering claims submitted by businesses following the TNT case. As claims are subject to strict time limits it is important to act quickly. It should be noted that first, second and metered mail and standard parcel delivery are and will continue to be exempt. A claim cannot be made in respect of these services.

For more information please do get in touch.

Internet links: VAT Brief

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