The government, at short notice, has brought forward the effective date from which electronic versions of publications are eligible for the zero rate VAT. Following the Chancellor’s budget in March, this change was scheduled to take effect from 1 December 2020.
From 1 May 2020, the zero rate of VAT will apply to the following items, when they are supplied electronically:
- Books, booklets, brochures, pamphlets and leaflets.
- Newspapers, journals and periodicals.
- Children’s picture books and painting books.
The zero rate does not apply to publications which:
- Are wholly or predominantly devoted to advertising; or
- Consist wholly or predominantly of audio or video content.
The bringing forward of the implementation date at such short notice, means certain aspects are still unclear at this stage and we expect HM Revenue & Customs to provide their guidance in due course. Whilst we expect normal time of supply rules will apply, and supplies of electronic publications with a time of supply on or after 1 May 2020 will be eligible for the zero rate, we do anticipate questions regarding annual subscriptions.
Membership organisations that are able to apportion their fees paid by members under ESC 3.35 for VAT purposes, will need to take into account the earlier introduction of these provisions, where an electronic magazine or similar, is provided to members as part of their membership package.
Suppliers of eligible electronic publications will need to update their systems quickly to ensure the correct rate of VAT is being accounted for from today. Suppliers will also be reviewing their pricing models as consumers will expect to see a reduction in the amount they are paying for e-publications.