HM Revenue & Customs is unclear about VAT on direct mail, Charity Tax Group says

The CTG says the revenue has failed to publish guidance on the matter or to resolve outstanding concerns

Direct mail
Direct mail

The Charity Tax Group has renewed its criticism of HM Revenue & Customs about a lack of clarity on the revenue’s policy for the VAT treatment of direct mail.

Discussions between HMRC, the CTG and the Direct Marketing Association about the VAT treatment of direct mail began in 2012. Last year, HMRC was urged to provide assurances on both the future treatment of bulk mailings and the possibility of billing charities retrospectively for hundreds of thousands of pounds in backdated VAT payments.

HMRC has said there has been no change to policy on the matter, but the CTG is concerned that previous guidance on that policy was misleading.

In December, HMRC said it would issue guidance on the issue that charities and their suppliers should implement by 1 April this year.

A spokesman for the revenue said at the time: "We accept that there has been genuine confusion about the border between supplies of zero-rated printed matter and standard-rated direct mailing. We will be writing to both the CTG and the DMA on the point and will issue new guidance that provides greater clarity on our policy."

On 31 March, the CTG and the DMA said this new guidance had not been published and HMRC should extend its 1 April implementation date. John Hemming, chair of the CTG, said at the time that HMRC had created "an unacceptable situation".

In a new statement issued today, Hemming said: "HMRC has failed to publish guidance on VAT and direct mail, and failed to resolve outstanding concerns that the retrospective concession, which we negotiated, has been narrowed to exclude unaddressed mailings and data-correction services in direct contradiction to earlier promises. It is unsatisfactory that charities have to operate according to new rules from 1 April without formal notice from HMRC of their responsibilities."

The CTG has urged charities to take note of correspondence between it and HMRC, talk to their mail providers or other professional advisers and contact the CTG if HMRC had attempted to assess VAT on their previous direct mail. A spokesman for the CTG said he was aware of HMRC having approached some direct mail providers to do so.

Sam Burne James recommends

Charity Tax Group

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