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HM Revenue and Customs Brief 19/10


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Issued 31 March 2010

VAT: postal services - claims for Input Tax


Following the European Court of Justiceís (ECJ) decision in the case of TNT Post UK Ltd (see Revenue & Customs Brief 64/09), a number of businesses submitted claims (including 'Fleming' claims) for a refund of VAT incurred on postal services purchased from Royal Mail. These have been held in abeyance by us pending discussions about the impact of the decision. These discussions have now been concluded and, as announced in the Budget Note 48, certain services previously treated as exempt from VAT will become liable to VAT at the standard rate with effect from 31 January 2011. This brief is to advise that we will now begin considering these claims and the criteria which will be applied.


In essence, the ECJ 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 further ruled that exemption applies to the public postal services (that is, Royal Mail), acting as such and does not apply to supplies where the terms have been individually negotiated. Accordingly, UK VAT law is being amended to bring it in line with the ECJ decision. The government intends to make the necessary legislative changes in a second Finance Bill 2010 to be introduced as soon as possible in the next Parliament.

Services affected

In broad terms, the proposed changes will mean that any service which is individually negotiated or not subject to any price and regulatory control will become liable to VAT at the standard rate. This includes, but is not limited to:

  • all individually negotiated services
  • Parcelforce services
  • door-to-door (unaddressed mail)
  • mailroom services.

Services which Royal Mail is obligated to provide under, or pursuant to, the terms of its licence - and which are therefore subject to price and regulatory control - will remain exempt from VAT (subject to there being no individual negotiation). This means:

  • services covered by Royal Mailís Universal Service Obligation (including stamped mail)
  • regulated services
  • access to its network for private postal operators

Detailed guidance on can be found in our Technical Note issued on Budget Day

Handling of claims

To be valid, a claim must have included the information required, as set out in Notice 700/45 How to correct VAT errors and make adjustments or claims. Claims that do not meet these basic criteria will be rejected.

Where a valid claim has been submitted, we will consider:

  • the contractual arrangements between the claimant and Royal Mail over the period of the claim
  • (in relation to 'Fleming' claims only) developments in the postal market and related legislation over the period of the claim
  • whether the supplies to which the claim relates would have been taxable at the standard rate under the new rules
  • evidence that Input Tax has been incurred.

Unless they were made under the transitional provisions in section 121(2) of the Finance Act 2008 (Fleming claims), all claims will be subject to the four-year time limit in regulation 29(1A) of the VAT Regulations 1995.

Further information

For further information please contact the Helpline on Tel 0845 010 9000.

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© Crown Copyright 2010.

A licence is needed to reproduce this article and has been republished for educational / informational purposes only. Article reproduced by permission of HM Revenue & Customs under the terms of a Click-Use Licence. Tax briefs are updated regularly and may be out of date at time of reading.

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Article Published/Sorted/Amended on Scopulus 2010-06-14 12:01:34 in Tax Articles

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