The December VAT change for e-books has been brought forward so the e-books UK VAT change is now from 01 May 2020!! It was great that the March Budget abolished VAT on digitised publications from December, so even better news to have this change brought forward.
Everyone had complained for years about the obvious unfairness of paying VAT on e-books but not on their paper equivalent so the solution was welcome. This latest change is in response to publishers reporting increased e-book consumption of 30-50% during the current crisis. At the end of April, IT media subscriptions are believed to be up by 200%. all of which is hardly surprising with everyone hungry for accurate and up-to-date information about what is happening through the current pandemic.
The rationale for announcing the change was linked to encouraging and furthering education. Of course we need to encourage everyone to read on whatever format. It also puts digitised publications on a par with their hard copy counterparts and removes the distortion that VAT has played in the market.
The original announcement will have come as a relief to those selling eBooks, such as Amazon. eNewspapers, eMagazines and even educational content from universities etc. will also benefit. They all now face having to make the change with immediate effect so re-calibrating prices will be quite a challenge.
News Corp Appeal led the way
It seems likely that the change was forced by the ‘News Corp‘ case (TC06385) heard at the Upper Tier Tribunal at the end of 2019. Judge Sinfield decided in favour of News Corp, holding that digitised newspapers ‘could’ be zero rated. The VAT community felt sure that this case would either be appealed by HMRC. That or apply the decision narrowly to exclude eBooks, eMagazines etc within the zero rating provisions. However, the Budget has put beyond doubt the future treatment of all digitised publications.
As e-books are set to get cheaper makes for great news for the industry, maintaining the VATable status of the supplies but at the zero% rate is the holy grail of VAT. Retail customers will have the burden of ‘sticking’ VAT removed. Whilst suppliers remain able to recover all VAT on costs – a win win!
Even though the VAT treatment of e-books has been made more certain, non-UK suppliers will still need to be registered for UK VAT. AVS VAT can look after VAT for you so why not get in touch. The printing industry will still face grey lines between what is chargeable at 0% -v- 20%.