On 8 March 2018, the First-tier Tribunal held6 that digital versions of certain newspapers did not qualify for zero-rating treatment available to the print editions of the same newspapers.

“Newspapers” are zero-rated for VAT purposes. The question at issue before the First-tier Tribunal was whether the digital versions of the same newspaper, which whilst not identical were broadly similar to the ‘hard-copy’ print edition, could also benefit from zero-rating.

The taxpayer’s view was that, even if not strictly “newspapers”, the principle of fiscal neutrality (so that VAT should be imposed consistently so as not to distort competition as between similar supplies) meant that digital and print editions should be subject to the same VAT treatment.

The Tribunal agreed with HMRC that “newspapers” could not encompass digital editions as these amounted to a supply of services. “Newspapers”, for the purposes of VAT zero-rating treatment, were (physical) goods. Indeed the Tribunal’s view was that the whole of the group of zero-rated items of which newspapers were just one type (“Books etc”) was confined to supplies of goods. The taxpayer did not succeed with an argument that the UK VAT legislation7 should be construed purposively, so as to extend to new forms of the provision of news following technological advances.

The decision can be viewed here.