VAT and the media industry

Ensuring you are VAT compliant can be a minefield at the best of times, particularly if it’s not immediately obvious how it applies to your business sector. This month we’re looking at VAT for the media industry – here are four facts you may not know:

Charity social media campaigns

Advertising services are usually subject to VAT at the standard rate, with the exception of charities. There is relief available for these organisations allowing them to benefit from the zero rate on some forms of advertising, providing that the advertising is targeted at the general public as opposed to a specific sector. However, the huge increase in social media campaigns over the last few years has meant that HMRC is now investigating whether charity adverts through this medium should qualify for VAT relief.

As Google and Facebook operate out of Ireland, this means that any UK business customer must account for VAT used on the supply of the service, and then claim VAT recovery subsequently. It’s possible that if the standard rate is brought in for charities who have purchased digital advertising from overseas, they could end up owing HMRC a considerable amount of money in back payments, for up to the last four years.