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HMRC internal manual

VAT Postal Services

HM Revenue & Customs
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Law: the TNT Post (UK) Ltd ECJ decision

TNT Post UK Ltd (TNT) challenged the UK’s application of the exemption in a liberalised market, arguing that it was inconsistent with EU law and that the exemption should apply to all postal operators or to none. The matter was eventually referred to the ECJ (case C-357/07) which recognised the obligations imposed uniquely on Royal Mail under its licence. As such, it observed that Royal Mail provided postal services under a legal regime substantially different to that under which private postal operators provide such services and their services could not be considered similar. Consequently, the Court ruled that the interpretation of the term public postal services would not have been affected by the liberalisation of the postal market and that:

The concept of “public postal services” … must be interpreted to cover operators, whether they are public or private, who undertake to provide, in a Member State, all or part of the universal postal service, as defined in Article 3 of Directive 97/67 … as amended by Directive 2002/39/EC.

This confirmed that Royal Mail, as the universal service provider, is the only postal operator in the UK eligible to exempt postal services from VAT.

However, the ECJ also ruled that exemption only applies to supplies by the public postal services acting as such and does not apply to supplies of services for which the terms have been individually negotiated (see VPOST4150) or which are dissociable from the public interest. As such, UK VAT law was amended with effect from 31 January 2011 so as to exclude certain services from exemption.

This change renders part (a) of Extra Statutory Concession 3.33 Supplies previously made by the Post Office (see Notice 48 Extra statutory concessions) redundant and it was withdrawn at the same time.