Business - BSkyB appeals £20m VAT case

Satellite broadcaster BSkyB is to appeal against an independent VAT tribunal ruling in the High Court, raising the stakes in a long-running tax dispute worth around £20m a year.

The decision comes less than two months after BSkyB lost its appeal over a Customs & Excise ruling last May that forced the broadcaster to pay the standard rate of 17.5% on its monthly TV guide.

James Morris, group tax manager for BSkyB, said it had lodged an appeal to the High Court last week. ‘They have made a mistake and applied the law incorrectly,’ he said.

BSkyB pays VAT on two satellite and digital TV guides for around seven million subscribers. It insists the guides, priced at £3.25 and £2.15, are separate supplies to its TV channels and should qualify for zero-rating in line with other magazines.

The dispute could push up the tax burden for other companies who supply magazines for subscribers as part of a bundled service.

Paul Hunter, a director of KPMG’s indirect tax unit, was broadly sympathetic to BSkyB’s argument but said factors such as the limited retail sales of the magazine weakened its case.

‘BSkyB has a hard road to overturn the verdict,’ he said. ‘When Customs win a case they have tended to expand the principle of the case. If they lose it says the case was lost on its own merits.’