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HMRC internal manual

VAT Postal Services

Scope of the exemption: access services

Pursuant to the regulatory conditions imposed by Ofcom or before 1 October 2011, the terms of its licence, Royal Mail is obliged to allow other postal operators and users access to its inward mail centre network for services providing for later than next day delivery of letters and large letters and it cannot discriminate between customers as to the price and terms offered. The Regulatory Conditions require that such Access services comply with an ex ante margin control, a form of price control. Charges for Standard Access - incorporating Responsible Mail and Advertising Mail to wholesale customers therefore remain exempt from VAT.

Additional charges made to postal operators for failure to comply with access terms and conditions amounts to further consideration for these supplies and they also remain exempt from VAT.

Royal Mail is also obliged under the terms of the regulatory conditions imposed by Ofcom, or before 1 October 2011 its licence, to redirect certain mail incorrectly placed in their network and belonging to other postal operators (known as the Common Operational Procedures). A single price is charged for this service and these fees remain exempt.

Bespoke charges for supplementary services provided in addition to the service of Access, such as container fees, are and remain subject to VAT at the standard rate.