VAT timebomb starts ticking again

VAT timebomb starts ticking againJust when the industry thought it had defused the VAT timebomb on so-called “single sourcing” of direct mail – which lumps together costs like print and post – the taxman has proved as elusive as Lord Lucan when it comes to issuing new guidance, due on April 1.
The DMA, which describes the situation as “intolerable”, is now calling on HMRC to postpone the new regulations until its position can be clarified.
Although the DMA had struck an agreement in principle late last year, the taxman confirmed in January that companies using the practice would have until April 1 to get their houses in order. Yet HMRC has now gone quiet as a mouse.
The position of companies like charities remains unresolved, as they are unable to reclaim VAT through agency agreements and disbursement, leaving these companies to pick up the VAT tab.
A number of issues remain unsolved, including the ability to treat a mailing service as a multiple supply for VAT purposes (and protect the VAT zero rating of the printed matter); whether unaddressed mailings are covered by the retrospection concession; and whether data manipulation is necessary and essential for the preparation of mailpacks.
The DMA and Charity Tax Group dispute the views of HMRC officials on a number of points and claim it is “intolerable” for organisations to adhere to the new regulations without resolving these issues.
Mike Lordan, the DMA’s head of external affairs said: “How are organisations like charities expected to run their mail activities when they don’t know how the new regulation apply on April 1? It’s an intolerable situation, and one that both we and CTG urge the government to postpone the implementation of the new rules until full guidance can be issued.”

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1 Comment on "VAT timebomb starts ticking again"

  1. Direct mail VAT timebomb starts ticking again #charity #directmarketing #directmail

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