The marketing and print industries have called on HM Revenue & Customs to clarify its position on charging VAT on printed matter, such as direct mail and leaflets, after hundreds of firms have been hit by crippling back tax assessments.
Agency trade body the IPA, along with the DMA and British Printing Industries Federation have taken up the fight on the issue which mainly affects SMEs, as they are unable to claim back VAT.
Usual practice, duly 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 asks that clarification of the position be included in the proposed Finance Bill to resolve this. It also offers the support of the three trade bodies concerned in drafting adequate explanations for suppliers and inspectors alike.
IPA finance director Alex Hunter said: “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.”
