HM Revenue and Customs Brief 64/09
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Issued 15 October 2009
VAT treatment of postal services: decision of the European Court of Justice
in the case of TNT Post UK Ltd
EU law provides a mandatory exemption from VAT for supplies of postal
services made 'by the public postal services'. In the UK, the application of
this provision is limited to Royal Mail and covers all of Royal Mail's postal
services. All other postal operators - both before and after full deregulation
of the postal sector in the UK on 1 January 2006 - are required to charge VAT at
the standard rate on their services.
Following a legal challenge to the scope of the exemption as applied in the
UK, the European Court of Justice in the case of TNT Post UK Ltd has confirmed
that Royal Mail, as the operator providing the public postal service, is the
only postal body in the UK eligible to exempt postal services from VAT. However,
it has also ruled that exemption applies to the public postal services (that is,
Royal Mail) acting as such and does not apply to supplies made by Royal Mail for
which the terms have been individually negotiated.
As a result, some postal services as supplied by Royal Mail - those which are
individually negotiated or not subject to any price and regulatory control -
which have been treated as exempt will become liable to VAT.
HM Revenue & Customs are currently in discussions with Royal Mail to
establish precisely which of their services will be affected and further
guidance will be issued once these discussions are complete. Any changes will be
implemented from a future date and, in the meantime, all postal services
provided by Royal Mail remain exempt from VAT.
For further information please contact the Helpline on 0845 010 9000.
© Crown Copyright 2009.
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