The Charity Tax Group and the Direct Marketing Association have said that it is "unacceptable" that HM Revenue and Customs has not published guidance about changes to VAT on direct mail, and called for the implementation date to be postponed.
But speaking to Civil Society News a spokesman for HMRC has said that the implementation date will not be pushed back.
HMRC confirmed that it considered printing and distribution of mail-packs should be treated as standard-rated for VAT purposes in October 2014. This decision amounted to a 20 per cent tax increase for charities that used direct mail as part of their fundraising.
After discussions between CTG, DMA and HMRC, the deadline for the tax implementation was pushed back to 1 April, in order to give charities six months to prepare.
According to a statement from CTG, detailed guidance in the guise of an updated VAT Notice was promised by HMRC in early 2015. The statement says that as this guidance still hasn’t been published charities affected by the tax changes are no better prepared for its implementation on 1 April as they were in October 2014.
John Hemming, chair of CTG, said that HMRC has left many charities facing an uncertain future: “HMRC’s failure to publish updated guidance leaves charities and suppliers unaware of their responsibilities with the 1 April implementation date less than two days away.
“This is an unacceptable situation and CTG and the DMA call on the government to extend the implementation date to allow for full consideration of the guidance.”
CTG said that there are still a number of issues surrounding the implementation of VAT on direct mail services which have not been properly explained. HMRC has not provided guidance on the treatment of bulk mailing or confirmed whether they will retrospectively bill charities for backdated VAT payments.
The DMA have also made similar calls on the government to postpone the tax, calling the situation as it stands “intolerable” for charities and other suppliers who use direct mail.
Mike Lordan, the DMA’s head of external affairs, said: “How are organisations like charities expected to run their mail activities when they don’t know how the new regulation apply on 1 April?
“It’s an intolerable situation, and one that both we and CTG urge the government to postpone the implementation of the new rules until full guidance can be issued.”
HMRC response to calls for postponement
A spokesman for HMRC told Civil Society News this morning that charities have known about proposed VAT changes since 2012. As a result, they expect direct mail service users to “pay VAT correctly” by the 1 April deadline.
“There has been no change to policy, as direct marketing services have always been subject to the VAT standard rate. This was made clear to the industry at a meeting in June 2012 and again by letter in July 2014," he said.
“Following representations we accepted that guidance on the treatment of direct mail could be improved and so in a letter of December 2014 we again confirmed the position but gave suppliers until 1 April 2015 to apply the correct treatment.
“We expect such suppliers to pay VAT correctly from 1 April.”
HMRC could not confirm when guidance would be published.
