Marketing and print industry seeks DM VAT clarification

Trade bodies are calling on HM Revenue & Customs to clarify the VAT position for companies supplying direct mail in the forthcoming Finance Bill.

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The Institute of Practitioners in Advertising (IPA), along with the Direct Marketing Association and British Printing Industries Federation, are acting on behalf of members over confusion about tax treatment. Supplying companies, which are typically SMEs, are finding disparity in tax treatment and some “financially crippling back tax assessments”.

The usual practice that has been accepted in routine VAT inspections has been that the supply of advertising leaflets and associated delivery is deemed a single supply of zero-rated printed matter.

This has recently being challenged by the Anti-Avoidance Group on a case by case basis and reinterpreted in a way that standard rate VAT has been assessed for all or part of the supply.

The submission from the trade bodies asks that clarification of the VAT position be included in the proposed Finance Bill. It also offers the support of the three trade bodies in help drafting a comprehensive explanation for suppliers and inspectors alike.

Alex Hunter, finance director of IPA, says: “We hope that by doing this the threat to companies of crippling back assessments is removed. There seems to have been a change in interpretation by HMRC that has neither been communicated clearly enough nor made explicit in law. It is imperative any confusion is cleared up so that companies can operate on a level playing field.”

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