More Royal Mail services to become subject to VAT in April 2012

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The price of using numerous Royal Mail services will rise in April 2012 when changes to the VAT law come into effect. Some Royal Mail services became subject to VAT in 2011, but from April all bulk mail services will attract VAT at 20%.

Some core services will remain unaffacted and unVATed including First and Second Class mail, Standard parcels, International Airmail, International Surface Mail and all HM Forces Mail (BFPO).

For a full list and FAQs there’s a page on the Royal Mail website.

How will this affect your business? Obviously, VAT registered companies can claim this back (but there is a impact on cashflow). Will it drive you away from Royal Mail? Or is it just a cost that can be passed onto buyers?

4 Responses

  1. Is it just me or isn’t this just money being passed around the system and another mindless idea from the government which will cost more to administer than the actual taxes collected?

    Most businesses who use bulk mail services will be VAT registered so they’ll pay the VAT over and then claim it back at the end of that quarter. Is the government so desperate for money that it’s worth the admin and red tape to have the cash at HMRC for 1-4 months before it gets handed back? Dave? George?

    I can’t believe the money raised from businesses that aren’t VAT registered will come close to covering the huge admin costs in administering this – and that’s not even considering the business hours in doing this.

  2. Just looking at the RM webiste the service that will become liable for VAT that beggars belief is… “Ministerial Pouch Services” – the government charging itself VAT? Give me strength! (with apologies to Whirly!)

  3. Government always seeks more power and more taxes so it inserts itself in to ever increasing areas of people’s lives. Every government I can recall has campaigned on cutting red tape yet none have.

    Wealth is extracted from the periphery in favour of the centre, and the centre has an inexhaustible appetite. We are expected to pay our dues to that system, however onerous, not to try to reduce our own burden or that of our community.

    As the centre seeks continually to solve the problems raised by excess complexity with more complexity, it also raises the cost (in terms of money and resources) of doing everything it touches. The periphery is then expected to cover the cost of the regulation that makes its own existence more precarious.

  4. From Royal Mail’s website, if anybody bothered to read it they would know the answers to their daft questions!

    “For many years, postal services have been exempt from VAT.

    “A court case has led to a change in the rules about VAT on postal services throughout the European Union. By law, we had to start charging VAT at the Standard Rate (20% for UK customers) on some postal services within the European Union (EU), including within the UK, from 31st January 2011.

    “The change only affects some Royal Mail services. Some of our services are part of the Universal Service Obligation (USO) or are subject to price control by our Regulator, and it has been agreed with HMRC that such services are not subject to VAT. However any services which are not part of the USO, or not price controlled are now liable to VAT at the standard rate.”


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