VAT to be added to some Royal Mail services
BUSINESSES that use Royal Mail and Parcel Force services could be in for a significant cash wind fall, following changes to the VAT position on those services.
Jason Croke, head of VAT services at the Wolverhampton and Birmingham offices of Haines Watts, said the change is great news for businesses that are VAT registered – but frustrating for organisations that are not.
The changes have come after Royal Mail put VAT on selected services after complaints by other commercial providers of postal services who have to charge the 17.5% tax.
Mr Croke described the change, which will come into force on January 31, 2011, as complex.
He said that for many companies there is an opportunity to reclaim the VAT on their postage expenditure back to May 2006.
“If a business has used Royal Mail or Parcel Force services, including Express and Tracked Services, Catalogues and Magazine Services and International Services then they might be able to reclaim the VAT back. Some companies spend a small fortune week in and week out on postage and so this could really boost their bottom line,” said Jason.
The change will mean, however, that many non-VAT registered entities, such as charities and schools, now face increased costs, without the ability to reclaim the VAT.
“For those organisations who, for whatever reason, are not VAT registered or unable to reclaim VAT, my advice would be to continue using the Royal Mail’s services which are not subject to VAT, and shop around for the best deal if you require any that are,” added Mr Croke.
