The Government introduces VAT relief on Personal Protective Equipment and electronic publications
Jan Garioch CA discusses recent VAT changes to provide some assistance in the current pandemic.
A new temporary zero rate is introduced for personal protective equipment (PPE) from 1 May 2020 to 31 July 2020. The benefit of this change applies to all parts of the UK, although the definition of what qualifies as PPE is that used in Public Health England’s guidance. The headline categories of PPE are filtering face respirators, surgical masks, eye and face protection, disposable aprons and gowns and disposable gloves. The objective of the change is to relieve businesses in the healthcare and residential care sectors of the VAT burden on PPE which is essential to deal with the COVID-19 emergency. However, individuals who purchase PPE during this three-month period will also benefit. For suppliers, this relief applies to existing stock as well as new stock.
In normal times, the impact of EU law would not have permitted the extension of zero rates. However, the EU Commission responded to requests from the UK and other Member States to temporarily waive VAT and Customs Duties on the import of PPE and medical devices to help the fight against COVID-19. In announcing the temporary zero rating of PPE, the UK government said the EU Commission’s support for VAT reliefs to mitigate the impact of the pandemic has given the UK greater scope to review VAT treatment of these supplies.
Another VAT change prompted in response to the pandemic is the bringing forward of zero rating on e books. As part of the Budget in March 2020, the Chancellor announced that sales of e-books and e-newspapers would be changed from standard rated to zero rated for VAT from 1 December 2020. That date has been brought forward to 1 May 2020 to provide relief at a time when people are confined to their homes and schools are closed.
The backdrop to this change is that in October 2018 the EU agreed rules to allow Member States to align the VAT rules for electronic and physical publications. That move aimed to modernise VAT for the digital economy. As a consequence, since the UK applied a zero rate for physical publications, it has been entitled to match that for electronic publications.
This change will impact supplies of e-books, e-booklets, e-newspapers, e-periodicals, e-magazines and electronic versions of children’s painting books. Publications which are predominantly devoted to audio and video content or to advertising are excluded from zero rating. Avoidance schemes to artificially split supplies in an attempt to latch on to zero rating for printed and electronically printed matter will be combated.