Move to challenge VAT on UK eBook sales
The UK government may be forced to scrap VAT on eBooks if a legal challenge from a London law firm is successful.
Berwin Leighton Paisner (BLP), acting on behalf of an unnamed client, is challenging HM Revenue and Customs (HMRC) over its decision to charge the standard 20% rate of VAT on eBooks while printed books attract no VAT.
Alan Sinyor, head of VAT at BLP, said that eBooks and print books should qualify for “fiscal neutrality on the grounds that they are the same from the perspective of meeting the customer’s needs.”
If the case is successful, HMRC may have to remove VAT on eBooks, which could have a knock-on effect of reducing their price.
However, according to VAT expert Richard Asquith at accounting firm TMF, one unintended consequence of a BLP victory could be that the EU orders the UK to levy VAT on printed books.
“The UK was only allowed to keep the reduced rate on printed books because they already had it when they joined, so if [BLP] wins, the question is, which rate should it be?” Asquith said. “Most member states say eBooks should be at the top rate.”
The EU last week ordered France and Luxembourg to scrap their reduced rates of VAT on eBooks and charge the standard rate, a move that will hit companies such as Amazon, which bases its operation in Luxembourg.