This notice cancels and replaces Notice 700/24 (April 2003). Details of any changes to the previous version can be found in paragraph 1.2 of this notice.
Other notices on this or related subjects
- 700 the VAT guide
- 701/8 postage stamps and philatelic supplies
- 701/10 zero-rating of books and other forms of printed matter
- 727/3 retail schemes: how to work the point of sale scheme
- 727/4 retail schemes: how to work the apportionment schemes
- 727/5 retail schemes: how to work the Direct Calculation Scheme
- 741A place of supply of services
- 744B freight transport and associated services
1.1 What is this notice about?
This notice explains how VAT applies to charges made for postage and delivery services and also the treatment of direct marketing services involving the distribution of printed matter.
1.2 What’s changed?
Section 2 has been revised to provide illustrative examples. Section 3 has been revised to improve understanding of what, in the context of printed matter, may be treated as a supply of delivered goods or a supply of direct marketing.
1.3 Who should read this notice?
You should read this notice if you:
- supply goods which you deliver to your customer
- provide a delivery service involving other people’s goods
- operate a direct marketing service that involves printed matter
1.4 Aren’t postal charges exempt from VAT?
Postal services provided by the Royal Mail Group Limited under its remit as the universal postal service provider in the UK are exempt from VAT if they are subject to price and regulatory control. This exemption does not extend to similar services provided by other suppliers, even where they might be seen as being in direct competition with Royal Mail Group Limited, as Royal Mail Group Limited is the only universal service provider in the UK.
The purchase of unused postage stamps does not attract VAT – this is explained in Notice 701/8 postage stamps and philatelic supplies. However, if any delivery charge you make to your own customers includes the cost of stamps you buy from the Post Office you may have to charge VAT on the whole amount including the cost of those stamps.
2. Delivered goods
Where goods are delivered to a customer and the price includes an amount for this service this is a supply of delivered goods. The way any delivery charge is treated for VAT purposes depends on the circumstances in which the goods are supplied. If you supply direct marketing services that involve the distribution of printed matter please refer to Section 3 of this notice.
2.2 How do I work out the VAT treatment for delivered goods?
|If …||Then …|
|I deliver goods to my customers but make no additional charge||if delivery is free, or the cost is built into the normal sales price, VAT is accounted for on the value of the goods based on the liability of the goods themselves.
This applies whether or not delivery is required under the contract.
|I deliver goods to my customer and make an additional charge||an additional charge for delivery will follow the liability of the goods.
The important test is whether delivery is included in the contract. You are making a single supply of delivered goods if, under the contract, you must deliver the goods to a place specified by the customer. This might include the customer’s:
friends or relatives
The position is not affected by whether the charge for delivery is separately itemised or invoiced to the customer. In either case there is a single supply of delivered goods for which the VAT liability is based on the liability of those goods.
|delivery is not required under the contract or I deliver somebody else’s goods||a delivery service is treated as a supply which is separate to that of the goods. The service provided is not one of delivered goods. This applies where you :
supply goods under a contract that does not require delivery but where, nevertheless, you agree to deliver the goods and make a separate charge
you provide a service of delivering somebody else’s goods (but see section 3 for direct marketing services)
In this case the liability of the delivery charge is not affected by the liability of the goods you are delivering and is always standard-rated even if the goods are not (but see section 4 if the delivery is to, or from, a place outside the United Kingdom).
|I make a separate charge for packing||a separate packing service for which a charge is made will be standard-rated within the United Kingdom (but see section 4 if the supply is connected with a movement of goods to, or from, a place outside the United Kingdom).|
|I am a retailer using a retail scheme||if you are involved in the supply of either delivered goods or you charge for delivery, accounting for the charge will depend on the type of scheme used. For each scheme you should follow the guidance in the relevant notice:
Point of Sale Scheme, Notice 727/3
Apportionment Scheme, Notice 727/4
Direct Calculation Scheme, Notice 727/5
3. Direct marketing services using printed matter
Direct marketing can comprise a range of goods and services which, depending on how they are supplied and/or combined, can result in different VAT liabilities being applied.
3.1 Printed matter
Where the supply comprises solely of printed matter, then it is treated as a supply of goods, usually taxable at the zero rate eg booklets, brochures, pamphlets and leaflets - see Notice 701/10 zero-rating of books and other forms of printed matter.
The following services may be treated as ancillary to the supply of zero-rated printed matter when they are supplied by the person who has the contract to supply the completed printed matter, provided that no other services (eg those listed at 3.3 below) are supplied with them:
- the creative design, drafting and preparation of printed matter
- the printing of direct mail packs using pre-sorted or unsorted data provided by the printing supplier’s customer, so that the mail packs include names, addresses, postcodes and barcodes
- the printing of direct mail packs and correction of data supplied by the printing supplier’s customer - data correction includes only:
- (i) amendment in accordance with Royal Mail address format guidance
- (ii) amendment to comply with the requirements of the Mail Preference Service, and
- (iii) removal of ‘gone-aways’ and the deceased
Further information on the liability of printed matter can be found in HMRC’s guidance VBOOKS4000.
3.2 Delivered goods
When the supply of direct marketing extends to the delivery of printed matter only, then what is to be treated as ‘delivered goods’ in the context of printed matter is as follows:
- the supply of printed matter and delivery to the customer for free (or where the delivery cost is built into the printing charge) is one of zero-rated printed matter
- the supply of printed matter and delivery to the customer under contract for a charge is one of zero-rated printed matter
- the supply of printed matter and delivery to the address of customer’s appointed mail operator in either of the above circumstances is one of zero-rated printed matter
The VAT treatment of direct mail to many recipients is explained in the following paragraph 3.3. There are situations where delivery may be treated as a disbursement when a supply of printed matter takes place - see paragraph 3.4.
3.3 Direct marketing
Direct marketing via mail (addressed or unaddressed, such as ’door drops’) or inserts in newspapers or magazines typically involves the production or acquisition of printed matter for distribution and any or all of the following services:
- posting or arranging the posting of customer mail such as publicity, advertising material or promotional goods to many recipients, including unaddressed mail (known as door drops)
- analysis or manipulation of data (either provided by the customer or sourced directly) for strategic or marketing reasons - for example, to target direct mail at specific groups based on geography, socio-economic factors or gender of recipients
- purchase or rental of third party mailing lists, including for amalgamation with customer’s own lists
- analysis of own and customer data to produce reports on campaign results and advice on strategy
When any of the services listed (or other marketing related services) are supplied with printed matter as a single supply, then that is taxable at the standard rate, as it is a supply of direct marketing services. Where the printed matter and any services are supplied separately then that may comprise multiple supplies and each component is taxed according to its VAT liability.
An example of a single supply occurs where a supplier prints leaflets for a charity and, as part of the contract, amends the charity’s customer data so that address and postcode details are correct. This is a single supply of zero-rated goods.
An example of multiple supplies occurs where a supplier provides marketing strategy advice to a charity and offers the option, under a separate contract, of printing leaflets. These are multiple supplies, one of standard rated marketing advice and one of zero-rated goods.
Whether services are to be treated as a single supply or multiple supplies will depend on the facts of each case. Further information can be found in our guidance VATSC80000 Single and multiple supplies.
Inserts in newspapers and magazines are normally standard-rated as a supply of advertising. Further information about the relief for charity advertising can be found in VAT Notice 701/58: charity advertising.
3.4 Delivery – treatment as a disbursement
When supplying printed matter (as defined in paragraph 3.1) a supplier may treat mail charges by mail operators as a disbursement for VAT purposes provided the following conditions are all met:
- the supplier meets the general disbursement requirements outlined in the section on ’Supplies made by or through agents: other situations’ in Notice 700 ‘the VAT guide’
- the supplier’s responsibility for the mail ceases when it is accepted for safe delivery by the mail company
- the supplier passes on any discount or rebate from the mail company to the supplier’s clients in full or, if the supplier obtains the discount or rebate from posting various clients’ mail at the same time, the supplier apportions it fairly between them
Freepost is an arrangement whereby the recipient (ie the advertiser) of a returned mailshot pays the postage costs on behalf of the sender (eg a member of the public), commonly a PO box number will also be used.
The supply by Royal Mail of the Freepost and PO Box licences, plus any handling service for which an additional fee is charged, is made to the licence holder. This may be the recipient (advertiser) or an agent handling the mail on the recipient’s behalf. However, the supply of postage is made to the sender of the mail, although the recipient (advertiser) or the agent meets the cost.
This means that where an agent is employed to handle the Freepost:
- any recovery of the postage costs by the agent from the recipient (advertiser) is not liable to VAT, and
- where the licence is taken out by the agent in the name of the recipient (advertiser) the costs may be disbursed to the recipient, subject to the normal rules referred to above
4. Goods delivered to or from the United Kingdom
4.1 What if I deliver somebody else’s goods, including mail and documents?
You are making a supply of freight transport services.
4.2 What happens if I transport goods to or from a place outside the UK?
|If you transport goods to or from …||then you are making a supply of …|
|another member state||intra-EU freight transport|
|a place outside the EU||international freight transport|
You will find further information on how these supplies should be treated for VAT purposes in Notice 744B Freight transport and associated services.
4.3 What happens if I supply only the UK leg of an international freight movement?
This is also covered in Notice 744B Freight transport and associated services.
4.4 What if I supply a separate packing service in connection with a movement of goods?
Depending on the contractual terms with your customer, you will probably be making a supply of an ancillary transport service. You can find further information on this in Notice 744B Freight transport and associated services.
Your rights and obligations
Your Charter explains what you can expect from us and what we can expect from you. For more information go to Your Charter.
Do you have any comments or suggestions?
We would be pleased to receive any comments or suggestions you may have about this notice. Please write to:
HM Revenue and Customs
VAT Supply Team
100 Parliament Street
Please note this address is not for general enquiries. You should ring our VAT General Enquiries about those.
Putting things right
If you are unhappy with our service, please contact the person or office you have been dealing with. They will try to put things right. If you are still unhappy, they will tell you how to complain. If you want to know more about making a complaint please go to Complain to HM Revenue and Customs.