News UK wins legal challenge to avoid VAT on Times website

Charlie Spargo's picture

In a tax tribunal ruling, News UK has successfully argued that the online presence of the Times and Sunday Times can be classified as a newspaper - and therefore be VAT-free - because of how often it is updated.

The media giant owned by Rupert Murdoch will potentially save huge amounts in tax and might even be able to secure a multi-million pound rebate from the UK government.

News UK has been involved in a long-running legal battle over whether it should pay the full rate of VAT at 20%, in the same way as many news websites, which are updated on a rolling basis.

However, since the online editions of the Times and Sunday Times are updated all at once, four times each day, the media platform argues that it should instead be seen as a periodical. Newspapers are traditionally exempt from VAT.

On January 6th, the tribunal ruled that the news website could indeed be seen as equivalent to a newspaper, based on a segment of the law on taxable products written in 1972. The body said it is “an essential characteristic of a newspaper that it is produced in periodic editions", allowing it to confirm News UK's claim of being closer to a newspaper than a website.

This decision may still be appealed by HMRC, but overturns a previous ruling stating the VAT exemption can only apply to physical products.