Royal Mail’s loss of VAT exemption ‘won’t affect direct mail’
Royal Mail has been told that it will soon be forced to begin charging valued added tax (VAT) for many of its services, but not on direct mail because its delivery is price-controlled and subject to regulation.
The decision on VAT by HM Revenue & Customs (HMRC) follows a ruling by the European Court of Justice (ECJ) in a case brought by TNT Post.
Royal Mail has until now, defended the exemption on the basis that it has to provide an Universal Service, which its rivals do not. Other postal service providers in the UK, including TNT Post, UK Mail and DHL, have to charge VAT at the standard rate.
But its direct mail services - Mailsort 1, 2 and 3 - are price controlled and won’t be subject to the HMRC ruling.
However, some experts have described the ruling as “disappointing” for direct marketers, as the HMRC proposal doesn’t address certain Royal Mail products used by direct mail that are priced controlled, such as downstream access.
As featured on Brand Republic.
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