TaxPersonal TaxRoyal Mail users urged to use VAT reclaim

Royal Mail users urged to use VAT reclaim

Smith & Williamson flags up a potential VAT special delivery for companies after taxman says retrospective reclaims will be considered

Businesses including mail order companies and internet retailers could be
eligible for a VAT reclaim on certain parcel services going back four years.

It was announced in the Budget that parcel deliveries of this kind would be
subject to VAT from 31 January 2011, but a European Court of Justice decision
has paved the way for retrospective claims.

Any business with individually negotiated arrangements with the Royal Mail
covering mailing services including Parcelforce could be in line for a VAT
pay-back, but those involved in large scale mailings will have the most to gain,
said tax experts at Smith & Williamson.

“I believe there could be thousands of businesses up and down the country,
both large and small, which could benefit,” said Hannah Dobson, VAT director at
the firm.
In an briefing last month, HMRevenue & Customs confirmed that the exemption
would be removed from next year, but did confirm that backdated claims would be
considered.

“To maximise their claim, organisations should lodge their request as soon as
possible. Retrospective VAT claims are capped at four years, so every day of
delay reduces the potential reimbursement. Typically, organisations which have
individual contracts with HMRC may be able to recover up to 7/47 of the gross
cost of those services,” Dobson added.

HMRC said in the briefing: “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 the ECJ case 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.”

Further reading:

HMRC’s
briefing

HMRC’s ECJ case
summary

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