The ongoing saga of News Corp UK's fight to get the same historic VAT treatment for its digital editions as for the paper editions was dealt a blow by the Court of Appeal in a judgement handed down this morning. News Corp lost in the First Tier Tribunal, and then won in the Upper Tribunal. However HMRC appealed to the Court of Appeal which has now decided that News Corp cannot claim the same beneficial treatment for its digital editions pre-May 2020. The significance of this case is largely historic because from 1 May 2020 the Government changed the rules to extend the benefit of zero-rating to most digital publications.
The battle is down to the previous language of the Value Added Tax Act 1994 which gave favourable 'zero-rated' VAT treatment to books, newspapers and a wide variety of printed matter. The wording of the legislation pre-dated the idea (let alone the reality) of a digital newspaper. News Corp have been arguing that the legislation should be given an expansive interpretation (which would include digital news services) to keep up with the times .. or should that be Times? The Court of Appeal however felt that the 'black letter' law was not amenable to that sort of interpretation, and that the principle of fiscal neutrality was insufficient to override the clear language of the legislation.
A lot of money hangs on this - for News Corp alone they are looking to reclaim tens of millions of pounds, and there will be other publishers who have made similar claims waiting in the wings. An appeal to the Supreme Court therefore looks likely.
The word "newspapers" in Item 2 Group 3, when read in its full context cannot be given the expansive interpretation for which News UK contended.