Supreme Court decides that digital newspapers were not Zero-Rated for VAT purposes

28 February, 2023

In News Corp UK & Ireland Ltd v Commissioners for His Majesty’s Revenue and Customs [2023] UKSC 7 the Supreme Court held that the zero-rating of ‘newspapers’ for VAT purposes in the Value Added Tax Act 1994 extended only to print newspapers and not to the digital editions of such newspapers—in particular those published by the appellant (The TimesThe Sunday Times and The Sun). It accordingly dismissed News UK’s appeal against the Court of Appeal’s judgment.

Both the leading judgment, given jointly by Lord Hamblen and Lord Burrows, and the concurring judgment of Lord Leggatt contain important consideration of the ‘always speaking’ doctrine of statutory interpretation, according to which legislation must in general be construed in light of any changes—including technological—that have occurred since it became law.

In this case, as a result of the ‘standstill’ provisions of then-applicable EU law, the UK’s zero-rating could not be expanded beyond its extent as of 31 December 1975. At that date, ‘newspapers’ referred only to printed newspapers. From the perspective of EU law, the purpose of those standstill provisions had been to prevent social hardship likely to follow from the abolition of existing national-law exemptions. No social hardship could have followed from the exclusion of digital editions from the zero-rating in force at 31 December 1975 because, at that time, nobody had access to them.

Further, the Supreme Court held that there was a conceptual difference between print newspapers and digital editions: the former were goods, whereas the grant of access to the latter was a service; and the buyer of a print newspaper obtained complete access to its content without the need for any other device or connectivity. So it would not be irrational for the legislator to differentiate between them.

Accordingly, the ‘always speaking’ doctrine in this case could not be applied to interpret ‘newspapers’ as including digital editions.

The Supreme Court’s judgment is available here.

Edward Brown KC, with Jonathan Peacock KC and Ed Hellier, appeared for News UK, instructed by Glen Harling of Deloitte. Stephen Donnelly with Eleni Mitrophanous KC appeared for HMRC.