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VAT Refund Opportunity on Postal Services

A recent decision of the European Court of Justice concerning Royal Mail services could open the door for some businesses to claim VAT repayments.

Royal Mail and Parcel Force charges are usually exempt from VAT under the exemption for “public postal services”, which rival carrier TNT believed gave an unfair competitive advantage. 

The European Court of Justice ruled that the VAT exemption should remain for Post Office services that are available to all, i.e. the “universal postal service”.  However, where services are negotiated directly and are subject to a separate contract with the Royal Mail, this does not form part of the public service and VAT must therefore be charged, in line with what third-party carriers such as TNT have always done.

This judgement means that payments under existing separate contracts with the Royal Mail can potentially be treated as including VAT, leading to the opportunity to recover part of the amounts paid as Input Tax.

Where any direct contract with the Royal Mail is held, a protective claim covering the last three to four years, and potentially further, should be made.

If you believe that you could benefit from this opportunity please contact our tax specialists Alan Rolfe or Tracy Jenkins to discuss the possibility of a VAT refund.

Taxation and Financial services advice are complex and ever changing and will depend upon the circumstances of each individual or business. Therefore whilst every effort has been made to ensure the accuracy of the information contained in this briefing, you should not act upon it without seeking professional advice.

Nothing in this briefing constitutes legal or other professional advice. You should not rely on any information contained in this briefing as if it were legal or professional advice.

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