Revenue and Customs Commissioners v News Corporation UK & Ireland Ltd

JurisdictionEngland & Wales
JudgeLord Hamblen,Lord Burrows,Lord Hodge,Lord Kitchin,Lord Leggatt
Judgment Date22 February 2023
Neutral Citation[2023] UKSC 7
CourtSupreme Court
News Corp UK & Ireland Ltd
Commissioners for His Majesty's Revenue and Customs

[2023] UKSC 7


Lord Hodge, Deputy President

Lord Kitchin

Lord Hamblen

Lord Leggatt

Lord Burrows

Supreme Court

Hilary Term

On appeal from: [2021] EWCA Civ 91


Jonathan Peacock KC

Edward Brown KC

Edward Hellier

(Instructed by Deloitte LLP (London))


Eleni Mitrophanous KC

Stephen Donnelly

(Instructed by HMRC Solicitor's Office (Salford))

Heard on 22 and 23 November 2022

Lord Hamblen AND Lord Burrows ( with whom Lord Hodge and Lord Kitchin agree):

1. Introduction

Under the Value Added Tax Act 1994 (the “VAT Act”), Value Added Tax (“VAT”) is not charged on newspapers. In the language of section 30 of the VAT Act, newspapers are “zero-rated”. The central question in this case is, in the specified period of 30 August 2010 – 4 December 2016, whether that zero-rating extended beyond print newspapers to what we shall refer to as “digital editions” of newspapers (ie editions for e-readers, tablets, smartphones and websites).


At a high level of generality, the answer to that question requires the application of principles of legislative interpretation and EU law that may be said to be pulling in different directions. On the one hand, there is the “always speaking” principle (of domestic statutory interpretation) which may be thought to support a wide interpretation. On the other hand, there is the EU law requirement to interpret exemptions from VAT strictly and to give effect to a “standstill” provision.


It is common ground that the decision in relation to the period in question will also be applicable to the period up to 1 May 2020. However, as from 1 May 2020, there can be no dispute because by reason of the VAT (Extension of Zero-Rating to Electronically Supplied Books etc) (Coronavirus) Order 2020, (SI No 2020/459) (the “2020 Order”), zero-rating has been “extended” to newspapers “when supplied electronically” (unless wholly or predominantly devoted to advertising or consisting wholly or predominantly of audio or video content). In other words, it is clear that, unless falling within the exception, digital editions of newspapers are zero-rated as from 1 May 2020.


Jonathan Peacock KC, counsel for News Corp UK & Ireland Ltd (“News Corp”), described this case as providing a classic example of where an “always speaking” interpretation is appropriate. This is because the facts concern a technological development (from printed newspapers to digital editions of newspapers) where the underlying purpose behind the VAT zero-rating carries through to the new development. This is an attractive submission not least because of its rational simplicity. But there are also powerful arguments to the contrary.


News Corp's central claim was rejected by the First Tier Tribunal (“FTT”): [2018] UKFTT 129 TC, accepted on appeal by the Upper Tribunal (“UT”): [2019] UKUT 404 (TCC), but rejected again by the Court of Appeal: [2021] EWCA Civ 91. News Corp now appeals to the Supreme Court.


In answering the central question, the parties were in agreement that one should initially put to one side the relevance, if any, of the EU principle of fiscal neutrality. This principle was essentially relied on by Mr Peacock as a fall-back position in the event of the court rejecting his central submissions. In line with this, we shall leave consideration of the principle of fiscal neutrality to the end of this judgment.


It is common ground between the parties that the withdrawal of the UK from the European Union (“EU”) has no impact at all on the issues in this case. While the UK was part of the EU, VAT was governed by EU Directives and those Directives were implemented in the UK by domestic statutes, in particular by the VAT Act. By reason of the European Union (Withdrawal) Act 2018 and the European Union (Withdrawal Agreement) Act 2020, the relevant EU law and EU derived domestic legislation is “retained EU law” after the implementation completion day (31 December 2020) but, in any event, the period with which this case is concerned expired before the implementation completion date.

2. The factual background

The newspapers in question are The Times, The Sunday Times, The Sun and The Sun on Sunday. In the relevant period, the relevant digital editions of The Times and Sunday Times were available in an e-reader edition, a tablet edition, a smartphone edition and a website edition; and The Sun and The Sun on Sunday were available on The Sun classic app and, as introduced in 2013, The Sun+ package.


The e-reader edition was an exact facsimile of the newsprint edition and could be downloaded on a daily basis onto a tablet computer or viewed on a personal computer. The tablet edition could be downloaded on a daily basis onto a tablet computer and then read off-line. The smartphone edition could be downloaded on a daily basis onto a smartphone and then read off-line. The website edition could be viewed at on any internet browser. The Sun classic app consisted of a digital replica of each print edition of The Sun each day available for use on tablets but allowed customers to skip between sections using the contents page. The Sun+ package was a bundle including entitlement to view The Sun website which was behind a paywall at the time, and access to The Sun+ goals app showing Premier League football goals and allowing subscribers to take advantage of certain perks such as free cinema tickets.


The Sun+ was not successful and was withdrawn in November 2015 at the same time as the paywall to the website was removed. During the period that The Sun+ was available The Sun website edition closely mirrored the content and structure of the print edition.


The FTT found — and by the time this case reached the Court of Appeal these findings were not challenged by HMRC — that the digital editions of The Times, The Sunday Times and The Sun on Sunday had “similar characteristics to those of the newsprint editions” (at para 150). The digital editions were essentially periodic-based publications (at para 152) and the “content of the digital and newsprint editions was … fundamentally the same or very similar” (para 153). The “digital editions were essentially, when the evidence was viewed in the round, the same as or very similar to the newsprint editions” (para 155); and readers considered them “to be fundamentally the same as the newsprint editions” (para 156).


Although the digital editions did provide some additional features to those in the print editions (such as videos, interactive puzzles, links to podcasts, access to Scottish and Irish sections and the ability to store articles in a “my articles” section and to share articles via social media) (para 105), these additional features were “relatively lightly used” (paras 65 and 105) and were “a relatively minor aspect of those digital editions” (para 155). Some of the digital editions could update their content, had search functions, and provided access to archived material and links to additional content (see, eg, paras 38, 68, 72, and 107). From the point of view of the subscriber, it was more “the content than the medium of its delivery to which most value was attached, although subscribers also valued the additional convenience of the digital platform” (para 156).


As found by the FTT (para 17) the social policy behind the decision to zero-rate newspapers was the promotion of literacy, the dissemination of knowledge and democratic accountability by having informed public debate.

3. EU and domestic legislation

Between 1940 and 1973 the UK levied an indirect tax on the wholesale price of goods called Purchase Tax. Certain items were exempt from Purchase Tax, including newspapers. Following the UK's accession to the European Economic Community (“EEC”) on 1 January 1973, Purchase Tax was replaced by VAT with effect from 1 April 1973.


VAT in general applies to the supplies of all goods and services at the standard rate, though the EU has specified that certain supplies shall be exempt from VAT (“EU mandated exemptions”). The EU has also under specified conditions permitted member states to continue to exempt certain supplies that are taxable under EU law, to maintain zero rates for supplies that are taxable under EU law, and to apply a reduced rate.


A member state's ability to apply a reduced or zero rate to certain supplies originated in Directive 67/228 (“the Second Council Directive”) which stated in the last indent of article 17 that member states were permitted, on what was described as a transitional basis, to “provide for reduced rates or even exemptions with refund [ie zero rates]”. Such measures were only authorised where they were “taken for clearly defined social reasons and for the benefit of the final consumer” (“the cumulative conditions”). These conditions were imposed in light of the general aim of harmonisation of VAT and the fact that, as stated in the fifth recital, “the introduction of zero rates gives rise to difficulties, so that it is highly desirable to limit strictly the number of exemptions”.


In anticipation of joining the EEC, the UK took advantage of the authorisation conferred by article 17 of the Second Directive to preserve the tax-free treatment of newspapers by enacting section 12 of the Finance Act 1972 (“the 1972 Act”). It did so in the knowledge that the authorisation was intended to be on a transitional basis but, in circumstances where the cumulative conditions were met, it wished to preserve the status quo in relation to the taxation of newspapers. Section 12 of the 1972 Act accordingly provided for the zero-rating of supplies listed in Group 3 of Schedule 4 to the Act. The supplies listed as Item 2 of Group 3 were “Newspapers, journals and periodicals” (“Item 2”). Zero rates are termed...

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