A lead case is to go before the First-Tier Tax Tribunal that could see businesses recover millions of pounds of VAT in respect of Royal Mail’s postal services.
In the past, Royal Mail had treated postal services as exempt under the Value Added Tax Act 1994. However, an earlier case brought by TNT determined that the most of Royal Mail services should, in fact, have been chargeable to VAT.
If the Tribunal finds in the current case that VAT is incorporated into the price of the postal services when those services should have been properly chargeable to VAT, businesses that have made use of Royal Mail postal services should be entitled to reclaim the input tax from HMRC for the last four years.
Gill Yates, Head of VAT services at Burgis & Bullock comments “The claims for VAT credit could well be in excess of the £220 million estimated by HMRC. A large number of businesses are Royal Mail customers and if the case is successful, they will be entitled to be credited for the VAT they have paid unknowingly because it is treated as having been included within the price paid.”
“I would urge all businesses that have not yet made a claim to consider doing so in order to ensure that they obtain the maximum benefit.“