March’s budget revealed that from 31st January next year, VAT
will be applied at the standard rate to certain postal services
provided by Royal Mail. According to a statement from Revenue and
Customs (HMRC), VAT exemption will no longer apply to
“supplies where the terms have been individually
negotiated”. Royal Mail has confirmed that these services
will include: Express and Tracked services; catalogue and
magazine services such as Big Book and Royal Mail Heavyweight;
international services, excluding items sent to non-EU
destinations which will remain VAT exempt; unaddressed mail and
door-to-door; receiving and managing mail services including
early extraction, early collection and Selectapost; contract
services including presorted delivery and mailroom management as
well as other services such as Admail and Business Mail
Secure.
HMRC confirmed it has already received a number of claims from
businesses requesting a refund on postal services purchased from
Royal Mail, and that it will now begin considering the claims and
the criteria that will be applied.
Some of those claims have been lodged by accountancy and
financial services group Smith & Williamson, which according to
associate VAT director John Rainsford has submitted “a
number of repayment claims on behalf of clients”. His firm
advises that cataloguers and online retailers submit their claims
urgently, “retrospective VAT claims are capped at four
years, so every day of delay reduces the potential
reimbursement,” said VAT director Hannah Dobson in a
statement. She estimates that certain organisations may be able
to recover up to 14.9 percent (7/47) of the gross cost of the
services.
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