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Mail Services: VAT

Answer

I understand this question to refer to postal operators in the UK.At present there are around 51 licensed postal operators in the UK, including Royal Mail.VAT is a matter for the HM Treasury and HM Revenue and Customs. I am however advised that under current UK VAT legislative provisions, all postal services provided by Royal Mail, as the universal service provider, are treated as exempt, including stamped, bulk and express mail. All other postal service providers are, in principle, required to charge VAT at the standard rate. However, other postal operators who make use of Royal Mail's facilities to deliver post for the 'final mile', can take advantage of special VAT arrangements to treat this element—which accounts for a significant proportion of the onward charge to their customer—as a 'disbursement' and only charge and account for VAT on the remaining amount.Royal Mail's exemption from VAT for postal services in the UK is currently the subject of legislative amendment as part of the Finance Bill which is progressing through Parliament. This follows a European Court of Justice decision which confirmed that Royal Mail, as the sole operator providing the universal postal service, is the only postal body in the UK eligible to exempt postal services from VAT. However, it also ruled that exemption does not apply to all Royal Mail's postal services and as such, those services which are either individually negotiated or not subject to price and regulatory control (such as Parcelforce and Mailmedia) will become liable to VAT at the standard rate. These changes are due to come into effect from 31 January 2011.

Secondary information

Type

Written question

Reference

18385; 516 c868-9W

Session

2010-12

Subjects

Postal services VAT

Link

View this Written question on www.publications.parliament.uk