19 July 2000

In a case brought on behalf of Leeds-based Direct Marketing Bureau by accountants Pannell Kerr Forster, an independent tribunal ruled against the recent imposition of Value Added Tax on mailings by financial services companies.

Hitherto, mailings were considered by Customs & Excise mainly to comprise zero-rated printed matter. However, Customs decided that the personalised content within a financial mailing pack constituted “advertising services”, rendering it liable to VAT at the standard rate of 17.5%.

Customs’ decision affected all types of mailing, but financial services companies would be especially hard hit as – unlike other product sectors – they cannot reclaim the tax. If the tribunal had upheld Customs & Excise's argument, financial mailings would have attracted an estimated extra cost of £50 VAT per 1,000 mailing packs.

A Customs & Excise spoke says it may decide to appeal against the ruling. It has until the end of August to do so.

News source: Precision Marketing (UK