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Being frank about VAT

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6 November 2014

From April 2012, a number of services provided by the Royal Mail which had previously been VAT exempt changed to become VAT liable.  Although this change happened some time ago now, there still seems to be some confusion about whether it is possible for companies to reclaim this VAT where they use a franking machine to pay for the service.

The answer is yes, providing the franking machine has ‘SMART’ technology fitted.  The ‘SMART meter’ franks at VAT inclusive prices and sends data to the Royal Mail on the services used.  An automatic invoice is then generated which enables the VAT suffered to be reclaimed.  We have, however, recently seen examples of clients not reclaiming back the VAT as they had thought the invoice generated did not meet the requirements of a valid invoice for VAT purposes. This is not the case so make sure you are not missing out!

If your franking machine does not have SMART technology then it will not be possible to use it for those services which are now VATable.

Regular services such as first and second class stamps and standard parcels remain VAT exempt, however, most other services such as Express delivery and Business Mail are subject to VAT. For further details of which postal services are/are not subject to VAT the Royal Mail has a comprehensive list and can be found by clicking here.

Julian Millinchamp - Indirect Tax Director
Julian Millinchamp
Indirect Tax Director Contact details