Original URL: http://www.theregister.co.uk/2005/05/09/email_vat_avoidance/

How to avoid VAT on email

CD burners, come on down

By Charles Arthur

Posted in Small Biz, 9th May 2005 12:34 GMT

Never underestimate the resourcefulness, or perhaps parsimoniousness, of Register readers. After last week's article pointing out how emailed data is liable to VAT, quite a few people responded along the lines of "Durr - why not just burn a CD and put it in the post? Won't that escape VAT?"

And the answer? Yes, it will avoid the evil 17.5 per cent bump-up. "In fact we do, if requested, burn CDs and post them, and our accountants are quite happy for us not to add VAT to our invoices if we do send data in this way," said Paul Redfern, who tipped us off to the whole weird thing in the first place. "The VAT on e-mailed data is on the supply of the service ([that] I do you in using email to send you the data), not the supply of the product (the data themselves)."

Of course, burning a CD and waiting for the Royal Mail to deign to collect it from a box rather spoils the immediacy of having wires (or radio signals) connecting the world to increase the speed of communication; you're in effect being taxed for doing things quicker.

And don't think that the folk in Brussels are going to watch all these CD-Rs being posted lying down. Oh no. Dr Redfern says that there are "moves afoot" to close this loophole. Meanwhile, if you'd like to understand the "thinking" behind a tax on how data is sent, you could do worse than read this one on "Application of the EU Value Added Tax to E-Commerce Transactions". ®

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