17 January 2013
Press ReleasesHead of VAT Services at accountants and business advisers James Cowper Kreston, Ruth Corkin, has warned against a change to end the UK’s Value Added Tax zero-rating on books, newspapers and magazines.
Part of the wider work being done to fundamentally reform the EU VAT system, a European Commission consultation that ended on 3 January gave strong hints on how the Commission would like to proceed on reduced VAT rates and it’s looking like change is on the cards.
Whilst the argument continues as to what format a publication can take, the UK has standard rated the provision of e-books, newspapers and magazines.
Commenting on the consultation in her role as the VAT Practitioners Group (VPG) National Technical Committee Chairperson, Ruth Corkin explained: “In the UK regular printed books, currently free from VAT may be at risk, not necessarily to the standard rate, but to a reduced rate overall. Under the consultation a compromise could also mean that all reading media will become liable to a rate above zero in the UK.”
There is an additional risk that imprecise definitions of electronic services could lead to a distortion of rates across the EU. Responding to this, the VPG Technical Committee has argued for a narrow definition of an e-book in EU law.
Ruth Corkin said: “The definition should be restricted to a book in electronic format consisting of text and/or illustrations in a similar way to that of a printed book. If the product goes beyond a paper book or audio book for the blind and has features such as moving images or performed music, it should be considered to be a supply of electronic services and taxed accordingly. However, if it reflects the qualities of a paper book it clearly makes sense to tax it in the same way as a printed book.”
The VPG National Technical Committee put forward a similar argument in respect of online newspapers and periodicals, arguing again for a precise definition in EU Law.
Ruth continued: “Electronic newspapers, magazines, periodicals and journals should be taxed in the same way as their printed form if they have the same characteristics as their traditional counterparts. However, given advances in technology, this should not be restricted just to the printed word but also include articles and content that has embedded links and other media that can be accessed at the choosing of the reader to enhance the reading experience. For example, this could include links to other articles on the same or connected subjects or to advertisements in video clip form, which the reader can choose to access in the same way that a reader can choose to read a paper advertisement.”
The consultation results will feed into the preparation of new proposals on VAT rates, which the Commission will present later this year. If the Commission were to propose getting rid of one reduced VAT rate or another it would have to be unanimously endorsed by Member States before it could happen.
Ruth Corkin, Head of VAT Services, James Cowper Kreston LLP, Tel +44 (0)1865 861166 or email
