In News Corp UK & Ireland v HMRC [2019] UKUT 404 (24 December 2019), the UT found that digital versions of newspapers fell within VATA 1994 Sch 8 Group 3 item 2 and were therefore zero-rated.
News Corp UK (‘News UK’) was the representative member of a VAT group which published (inter alia) The Times, The Sunday Times, The Sun and The Sun on Sunday. The issue was whether the digital versions of these newspapers were themselves ‘newspapers’ and therefore zero-rated.
News UK contended that the meaning of ‘newspapers’ in VATA 1994 Sch 8 was broad enough to include the digital versions now available. Recognising, however, that the concept of a supply of digital versions of newspapers was not within the contemplation of the drafter of the legislation in 1972, News UK relied, in the alternative, on the ‘always speaking’ doctrine of statutory interpretation.
Referring to the doctrine, the UT quoted the following passage of R (Quintavalle) v Secretary of State [2003] 2 All ER 113: ‘There is, I think, no inconsistency between the rule that statutory language retains the meaning it had when Parliament used it and the rule that a statute is always speaking.’ The UT observed that in order to conclude that ‘newspapers’ in VATA 1994 included digital newspapers, it was necessary to find that digital newspapers were within the legislative purpose as expressed in VATA 1994 as a consequence of the characteristics they shared with the (physical) newspapers that existed at the time.
The UT accepted the FTT’s findings that the digital versions shared similar characteristics with the newsprint editions. In particular, the digital versions were edition-based publications, the contents of both editions were fundamentally the same or very similar, and the updates and additional content available in the digital versions were relatively minor.
The ‘essential question’ was therefore whether the digital versions, with the characteristics found by the FTT, fulfilled the legislative purpose of the statutory provision. That purpose was ‘to promote literacy, the dissemination of knowledge and democratic accountability by having informed public debate’. The UT noted, however, that it was not enough to show that a particular service satisfied that legislative purpose; it was also necessary to show that the service shared the essential characteristics of a ‘newspaper’. For this reason, a rolling news website, which furthered the legislative purpose of promoting literacy, the dissemination of knowledge and democratic accountability, would not satisfy the test as it did not provide edition-based curated news.
The UT concluded that both the purpose and the characteristics of the print and digital editions were identical. This was particularly true of the e-reader version, which consisted of an exact facsimile of the printed newspaper made available for downloading. The UT added that the invention of a digital form of newspaper was ‘precisely’ the type of technological development (not contemplated at the time of the passing of the legislation) that the ‘always speaking’ doctrine was intended to address.
Why it matters: This decision has wide-ranging implications beyond the realm of newspapers. In particular, the UT rejected the FTT’s finding that the fact that an enactment is designed to be restrictive means that the operation of the ‘always speaking’ doctrine must be excluded in relation to that enactment. Similarly, the FTT had been wrong to find that VATA 1994 Sch 8 Group 3 was intended to be limitedto items that were goods (i.e. ‘physical’), as opposed to services.
In News Corp UK & Ireland v HMRC [2019] UKUT 404 (24 December 2019), the UT found that digital versions of newspapers fell within VATA 1994 Sch 8 Group 3 item 2 and were therefore zero-rated.
News Corp UK (‘News UK’) was the representative member of a VAT group which published (inter alia) The Times, The Sunday Times, The Sun and The Sun on Sunday. The issue was whether the digital versions of these newspapers were themselves ‘newspapers’ and therefore zero-rated.
News UK contended that the meaning of ‘newspapers’ in VATA 1994 Sch 8 was broad enough to include the digital versions now available. Recognising, however, that the concept of a supply of digital versions of newspapers was not within the contemplation of the drafter of the legislation in 1972, News UK relied, in the alternative, on the ‘always speaking’ doctrine of statutory interpretation.
Referring to the doctrine, the UT quoted the following passage of R (Quintavalle) v Secretary of State [2003] 2 All ER 113: ‘There is, I think, no inconsistency between the rule that statutory language retains the meaning it had when Parliament used it and the rule that a statute is always speaking.’ The UT observed that in order to conclude that ‘newspapers’ in VATA 1994 included digital newspapers, it was necessary to find that digital newspapers were within the legislative purpose as expressed in VATA 1994 as a consequence of the characteristics they shared with the (physical) newspapers that existed at the time.
The UT accepted the FTT’s findings that the digital versions shared similar characteristics with the newsprint editions. In particular, the digital versions were edition-based publications, the contents of both editions were fundamentally the same or very similar, and the updates and additional content available in the digital versions were relatively minor.
The ‘essential question’ was therefore whether the digital versions, with the characteristics found by the FTT, fulfilled the legislative purpose of the statutory provision. That purpose was ‘to promote literacy, the dissemination of knowledge and democratic accountability by having informed public debate’. The UT noted, however, that it was not enough to show that a particular service satisfied that legislative purpose; it was also necessary to show that the service shared the essential characteristics of a ‘newspaper’. For this reason, a rolling news website, which furthered the legislative purpose of promoting literacy, the dissemination of knowledge and democratic accountability, would not satisfy the test as it did not provide edition-based curated news.
The UT concluded that both the purpose and the characteristics of the print and digital editions were identical. This was particularly true of the e-reader version, which consisted of an exact facsimile of the printed newspaper made available for downloading. The UT added that the invention of a digital form of newspaper was ‘precisely’ the type of technological development (not contemplated at the time of the passing of the legislation) that the ‘always speaking’ doctrine was intended to address.
Why it matters: This decision has wide-ranging implications beyond the realm of newspapers. In particular, the UT rejected the FTT’s finding that the fact that an enactment is designed to be restrictive means that the operation of the ‘always speaking’ doctrine must be excluded in relation to that enactment. Similarly, the FTT had been wrong to find that VATA 1994 Sch 8 Group 3 was intended to be limitedto items that were goods (i.e. ‘physical’), as opposed to services.
