UK Mail Operators to be Exempt from VAT?

The Sunday Telegraph reports today (9 November) that the views of Nigel Stapleton, Postcomm’s Chairman-designate, ‘will set him on a collision course with the European Commission’. This is unlikely!

The British Government (including Postcomm) oppose the imposition of full-rate VAT on stamps. However, a draft EC Directive allows there to be a reduced rate which could, in the UK, be a pain-free alternative to the current situation in which Royal Mail’s customers pay hidden VAT of around 3%. This is because Royal Mail pass on to their customers the VAT that the company pays but cannot reclaim. It may be, therefore, that the introduction a low VAT rate might level the competitive playing field without increasing the price of a stamp.

This issue will be explored in some detail in a consultative document which Postcomm intends to publish within the next few weeks.