HMRC is urged to delay VAT changes on direct mail

The Charity Tax Group and the Direct Marketing Association call on the government to extend the deadline to allow for full consideration of the guidance

Direct mail
Direct mail

The Charity Tax Group and the Direct Marketing Association have urged HM Revenue & Customs to delay what they say is a change to the VAT treatment of direct mail because the government has so far failed to produce guidance on the new arrangements.

Discussions between HMRC, the CTG and the DMA 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 retrospectively billing charities for hundreds of thousands of pounds in backdated VAT payments.

In December, HMRC said the new arrangements that would increase the VAT bills of some charities would come into force on 1 April. It said that guidance on the change would be published early this year, but this has still to be published, according to the CTG and the DMA.

The CTG said it understood that from 1 April the printing of fundraising mail packs would not be liable for VAT, but this exemption would be removed for the distribution of mail packs. However, the lack of new guidance meant it was not sure what the final position would be.

In a press statement made yesterday afternoon, John Hemming, chair of the CTG, said: "HMRC’s failure to publish updated guidance leaves charities and suppliers unaware of their responsibilities with the 1 April implementation date less than two days away. This is an unacceptable situation and the CTG and the DMA call on the government to extend the implementation date to allow for full consideration of the guidance."

A spokesman for the CTG said the group had previously asked HMRC to delay the implementation of the new arrangements and that it had made this plea again on Monday.

Mike Lordan, head of external affairs at the DMA, said: "How are organisations such as charities expected to run their mail activities when they don’t know how the new regulations apply on 1 April? It’s an intolerable situation and both we and the CTG urge the government to postpone the implementation of the new rules until full guidance can be issued."

A spokesman for HMRC said: "After receiving representations, we accepted that guidance on the treatment of direct mail could be improved – so, in a letter of December 2014, we again confirmed the position but gave suppliers until 1 April 2015 to apply the correct treatment."

But the spokesman did not say when the improved guidance that had previously been promised would be available.

Sam Burne James recommends

Charity Tax Group

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