Supreme Court decides that digital newspapers are not ‘newspapers’ for VAT purposes


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News Corp argued that the digital editions of The Times, The Sunday Times, The Sun and The Sun on Sunday (such as editions for e-readers, tablets, smartphones and websites) were ‘zero-rated’ for VAT purposes between 2010 and 2020. This would have meant that no VAT ought to have been charged on them and that News Corp were entitled to a £35 million repayment from HMRC. Since 2020, a change to the Value Added Tax Act 1994 has expressly zero-rated digital editions of newspapers, but News Corp argued that this had also been the position prior to this change in the law. News Corp relied on the fact that printed newspapers have always been zero-rated under VAT legislation and argued that it followed from the application of the ‘Always Speaking’ principle of statutory interpretation that this also extended to the digital editions. The ‘Always Speaking’ principle holds that a statute should be interpreted taking into account changes that have occurred since it became law, even if those changes could not have been reasonably foreseen at the time the statute was enacted. News Corp also based its case on the EU law principle of ‘fiscal neutrality’, relying on the finding by the First-tier Tribunal that the content of the digital editions was fundamentally the same or very similar to that of the printed editions and both furthered the relevant social policy of the zero-rate which was the promotion of literacy and democratic accountability and the dissemination of knowledge.

The First-tier Tribunal found against News UK on the issue of statutory interpretation and fiscal neutrality. The Upper Tribunal found in favour of News UK, applying the ‘Always Speaking’ principle. The Court of Appeal reversed that decision and News Corp appealed to the Supreme Court.

The Supreme Court unanimously dismissed News Corp’s appeal. The majority held that the zero-rating provisions permitted under EU law had to be interpreted strictly and that the categories of zero-rating could not be expanded beyond those that existed in 1975. These constraints limited the application of the ‘Always Speaking’ principle and ‘newspapers’ had to be given a narrow meaning applying only to news communicated through the medium of print in a physical form. The zero-rate therefore did not extend to the electronically supplied digital services. The EU principle of fiscal neutrality also did not support News Corp’s case. In a concurring judgment, Lord Leggatt considered that, in cases of technological development, the proper approach was to ask whether the new invention falls within the meaning of the statutory language, interpreted in the light of the legislative purpose. The term ‘newspapers’ did not include the digital editions in light of the EU law constraints, the nature and purpose of the legislation, and the relevance of the method of delivery of news content.

Eleni Mitrophanous KC appeared for HMRC.


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