This follows the so-called “VAT timebomb” flagged up by the DMA last year, whereby suppliers had combined postage and production costs in a practice known as 'single sourcing'.
Ambiguity over the VAT rules resulted in firms being potentially liable for huge backdated VAT bills, going back to 2012.
The transitional arrangements subsequently agreed by HMRC will only be available to companies that have formally notified the department that they intend to adopt the arrangements.
The HMRC policy briefing states: “Failure to notify an intention to adopt the transitional arrangements by 30 November 2015 will mean that a business will no longer be entitled to take advantage of them.”
DMA postal affairs consultant Alex Walsh said: “People might not be aware of this proviso. My advice would be to put your hand up and register to be absolutely safe.”
Walsh added that unless there were complicating factors, printers shouldn’t have a problem with the arrangements.
Due to the uncertainty over the previous HMRC guidance over what aspects of direct marketing could be treated as zero-rated, some print suppliers had also inserted clauses in their contracts stating that the customer would be liable for any subsequent VAT charge.
However, PrintWeek has also learned that some clients have tried to insert similar clauses themselves, but putting the onus on the printer to pick up any retrospective VAT demands.
Walsh also warned that in the past some printers and print managers “did push the boundaries quite a lot” about what could be zero-rated.
“The issue centres around what is a marketing service and what is direct mailing. Some people had been including much more than print and delivery, for example template planning and response analysis,” he said.
One printer, who wished to remain anonymous, told PrintWeek: “It will affect quite a few people, especially print managers who are wrapping it all up as a service and don’t actually have printing presses.
“It’s been a bloody minefield. HMRC is going back four years, which seems a bit harsh. The DMA has stirred up quite a hornet’s nest with this.”
The HMRC briefing includes updated guidance to provide greater clarity on the matter. This came into effect from 1 August.
Additionally, it includes provision for companies to agree a settlement where the services provided did not fall within the scope of the transitional arrangements. But again, companies must notify HMRC by the end of the month if they wish to settle.
The HMRC briefing, together with details about how companies can register, can be found here.
