Call to clarify VAT rules for DM

Three trade bodies have urged the Government to clarify the VAT position of suppliers of direct mail.

The Direct Marketing Association, The Institute of Practitioners in Advertising (IPA) and the British Printing Industries Federation have called on HM Revenue and Customs to make VAT rules clear in the forthcoming Finance Bill.

The trade bodies said their members - mainly SMEs - reported encountering inequalities in their tax treatment, while some complained of receiving "financially crippling back tax assessments".

In routine VAT inspections, supply of advertising leaflets and their delivery is considered a single supply of zero-rated printed matter.

The trade bodies have also offered to lend their support in drafting a comprehensive explanation concerning the issue for inspectors and suppliers.

IPA finance director Alex Hunter said: "We hope that by doing this the threat to companies of crippling back assessments is removed. There seems to have been a change in interpretation by HMRC that has neither been communicated clearly enough nor made explicit in law. It is imperative any confusion is cleared up so that companies can operate on a level playing field."

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