Digital Newspapers: Zero-rating win for The Times in Upper Tribunal

News Corp (that own the Times and Sunday Times) previously lost a VAT Tribunal in 2018 where they tried to argue that their online digital newspapers should benefit from the same VAT treatment as printed editions.

At the Upper Tribunal, the judge found in favour of News Corp stating ‘that item did not exist in 1991’ – referring to digital newspapers. Currently print newspapers are zero-rated for VAT, while all online versions and website subscriptions are subject to VAT at 20%.

There were two issues considered:

  • Whether the digital editions of the newspaper titles were ‘newspapers’ within the meaning the zero-rating provisions of the VAT Act; and,
  • Whether the application of the principle of fiscal neutrality required zero-rating.

The appellant (News Corp) contended that the principle of fiscal neutrality applied because the similarities between the print and digital versions of the newspapers, from the perspective of consumers, meant they should receive the same VAT treatment.

The Upper Tribunal made the decision that although it might be correct to observe that digital versions of newspapers are zero-rated, this would result in an item being zero-rated under UK domestic law that was not zero-rated in 1991. This is solely because ‘that item did not exist in 1991 and the item is properly to be characterised as within the genus of things that the pre-1991 legislation did exempt’, according to the Upper Tribunal Judge.

The publisher first brought the case to the VAT Tribunal in 2018, arguing that its digital editions were ‘newspapers’ under the terms of the VAT Act and should be zero-rated.

The original Tribunal ruled in favour of HMRC, stating that the content of The Times and The Sunday Times was ‘fundamentally the same or very similar’ as between the digital and printed editions. It concluded that the digital editions provided services rather than goods, whereas the relevant Schedule in the legislation relating to zero-rating was confined solely to goods.

At the original Tribunal, News Corp had also argued that the word ‘newspaper’ should be interpreted in a way which keeps pace with technological developments, but the Tribunal decided that a strict interpretation should apply.

The EU is currently debating whether to change the rules on VAT on digital books and online published media so this development is timely (although with the UK leaving the EU it is unlikely that any EU VAT Directive changes will impact on UK law).

It is highly likely that HMRC will appeal this decision, however any providers of digital newspapers and magazines may wish to review their VAT positions.

If you have a VAT related query, please contact our VAT Director Iain Masterton today at