HMRC to update VAT treatment for direct mail supply


HMRC has confirmed that it will be updating its guidance on the VAT treatment on the supply of direct mail this year

This follows an announcement from the Direct Marketing Association (DMA) that it intended to lobby the Treasury and the Department for Business, Innovation and Skills (BIS) to prevent HMRC from imposing backdated VAT charges and penalty fines for businesses while the industry was waiting for guidance.

The DMA said it was ‘concerned that if businesses are penalised for the two years when they did not pay VAT, some could end up passing the cost onto their charity clients’.

Defending the delay in issuing detailed guidance, an HMRC spokesperson told Accountancy Live: ‘HMRC apologises for the delay in responding to the Direct Marketing Association's letter. However the VAT treatment of the supply of direct mail is already set out in guidance - chapter 3 of HMRC Notice 700/24 - Postage and delivery charges dating from 2003.

He added: ‘HMRC met with DMA in June 2012 and clarified that the treatment remained the same (as in the notice) and the supply should be standard rated.

‘The July 2014 letter from HMRC to DMA contains additional examples but there is no new information or change regarding the VAT treatment of these supplies that was not available in 2012.’

HMRC said that the guidance would be reviewed as part of its regular updates.

‘As part of routine review and maintenance of guidance, HMRC will in due time update Notice 700/24 during 2014 and will include the examples in the letter of July 2014 to the DMA,’ HMRC confirmed.

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