First up in this case triad are Leeds based Direct Marketing Bureau (“DMB”), who appealed against a Customs & Excise (“C&E”) position that VAT was payable at the standard rate on direct mailing packs when created by DMB for clients of theirs wishing to use the packs to advertise their products.
Topic: Tax
Who: ASA, Solicitors, Expansys, Direct Marketing Bureau and HM Customs & Excise
When: July/August 2000
Where: England
What happened:
First up in this case triad are Leeds based Direct Marketing Bureau ("DMB"), who appealed against a Customs & Excise ("C&E") position that VAT was payable at the standard rate on direct mailing packs when created by DMB for clients of theirs wishing to use the packs to advertise their products. C&E regarded the packs as sufficiently personalised to classify as "advertising services" chargeable at the normal rate, as opposed to printed matter chargeable at zero rate. The appeal decision was for DMB and against standard rate VAT.
Why this matters:
Although C&E may well appeal, the case is particularly significant for businesses such as financial services providers who cannot pass the VAT on. Such companies may wish to review the VAT treatment of all marketing services and products supplied to them, as the demarcation line between printed matter and ad services in this context seems at best unclear.
Separately, both solicitors and an electrical retailer Expansys have been criticised by the Advertising Standards Authority for failing to show prices inclusive of VAT when advertising mainly to non-business customers. In Expansys’ case, the internet ad stated at the bottom of the screen "All prices exclude VAT." Expansys had in fact joined the Consumers’ Association "WebTrader?" scheme, the CA having checked its website and apparently not made any comment about VAT treatment. In its assessment, the ASA pointed out that WebTrader membership obliged all members to comply with the Codes, which required that they quote VAT inclusive prices in advertising unless it was mainly aimed at businesses.
