*UPDATE*: HMRC has previously ruled that most digital advertising should be subject to VAT. For more than two years, the Charity Tax Group (CTG) have been challenging HMRC on this.  Despite a number of disappointing responses over this period persistence has finally paid off.

A letter received by CTG in July 2020, provides a welcome clarification of the HMRC view of the VAT position. HMRC now accepts that VAT is no longer considered due on the majority of internet search browsing advertisements.  The letter sets out the categories of advertisements that fall into this category.However, all advertising sent to a social media address that is a ‘personal account’, or where the recipient has paid a subscription for the site continues to be treated by HMRC as standard rated for VAT purposes. Full details can be found in this press release and should be regarded as the current position.

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The Charity Tax Group (CTG) has been engaged in a dialogue with HMRC concerning its policy relating to VAT on digital advertising. Following extensive discussions with a coalition of affected charities and universities, we sought Counsel’s opinion, which was favourable to our view, and which was sent to HMRC.  Notwithstanding this advice, we have received a disappointing response from HMRC which is adopting a narrow interpretation of the VAT rules, and which confirms their previous views.

Digital Advertising – HMRC response to the Charity Tax Group [PLEASE NOTE THIS IS NOT THE MOST RECENT LETTER – IT IS RETAINED HERE FOR ARCHIVE PURPOSES]