News Corp UK & Ireland Ltd v Commissioners for His Majesty’s Revenue and Customs [2023] UKSC 7

News Corp argued digital editions of its newspapers should be zero-rated for VAT like printed newspapers. The Supreme Court dismissed the appeal, holding that 'newspapers' in the VAT Act referred only to physical printed items, not digital editions. The always speaking principle could not extend the meaning given EU law constraints requiring strict interpretation of VAT exemptions.

Facts

News Corp UK & Ireland Ltd published The Times, The Sunday Times, The Sun, and The Sun on Sunday. Between 2010 and 2016, it supplied digital editions of these newspapers via e-readers, tablets, smartphones, and websites. Under the Value Added Tax Act 1994, printed newspapers were zero-rated for VAT purposes. News Corp sought to have the digital editions similarly zero-rated, arguing they were ‘newspapers’ within Item 2, Group 3, Schedule 8 of the VAT Act.

The First Tier Tribunal found that the digital editions had ‘similar characteristics to those of the newsprint editions’ and the ‘content of the digital and newsprint editions was fundamentally the same or very similar.’ Readers considered them ‘to be fundamentally the same as the newsprint editions.’

Issues

The central question was whether the zero-rating for ‘newspapers’ under the VAT Act extended to digital editions of newspapers during the period 30 August 2010 to 4 December 2016.

Key Sub-Issues

• Whether the ‘always speaking’ principle of statutory interpretation applied to extend the meaning of ‘newspapers’ to include digital editions
• Whether EU law requirements for strict interpretation of VAT exemptions and the ‘standstill’ provision limited such an interpretation
• Whether the principle of fiscal neutrality required equal treatment of printed and digital editions

Judgment

The Supreme Court unanimously dismissed News Corp’s appeal, holding that ‘newspapers’ in Item 2 did not include digital editions.

The Always Speaking Principle and EU Law Constraints

Lords Hamblen and Burrows (with whom Lords Hodge and Kitchin agreed) held that while the always speaking principle is well-established in statutory interpretation, it must be applied having regard to EU law constraints. They stated:

“Here these constraints mean that the always speaking principle is significantly limited so as to ensure that it does not conflict with the requirement for zero-rating for newspapers to be strictly construed and not extended.”

The Court emphasised that exemptions from VAT must be interpreted strictly, particularly national law exceptions tolerated by EU law. As explained in Talacre Beach:

“the scope of derogation allowed by the standstill provision ‘is restricted to what was expressly covered by the national legislation’ on… 31 December 1975”

Defining Characteristics of Newspapers

The Court found that in 1975, newspapers were understood to be news communicated through the medium of print in physical form. Two defining characteristics were identified: first, a physical printed form and, secondly, accessibility without a separate device. The Court stated:

“Those two characteristics – first, a physical printed form and, secondly, accessibility without a separate device – are a reflection of there being a conceptual difference between newspapers in 1975 and digital editions and of that difference being a radical one which opens up all sorts of possibilities for interactive communication.”

Lord Leggatt’s Concurrence

Lord Leggatt agreed with the outcome but expressed different reasoning regarding the always speaking principle. He stated:

“the general rule or presumption articulated by Bennion and others that statutes are to be interpreted as ‘always speaking’ is stated at too high a level of generality to be meaningful.”

He concluded that the requirement to interpret the term strictly meant the narrower possible meaning must be preferred, treating printed form as a defining characteristic.

Fiscal Neutrality

The Court held that the principle of fiscal neutrality could not assist News Corp as it cannot be relied upon to extend the scope of an exemption.

Implications

This decision clarifies the limits of the always speaking principle in statutory interpretation when EU law constraints apply. It confirms that VAT exemptions must be strictly construed and cannot be extended beyond their original scope through purposive interpretation. The judgment is significant for understanding how courts balance domestic interpretive principles against EU law requirements.

The decision was effectively superseded from 1 May 2020 when the VAT (Extension of Zero-Rating to Electronically Supplied Books etc) (Coronavirus) Order 2020 explicitly extended zero-rating to newspapers ‘when supplied electronically’, following EU Directive 2018/1713 which permitted such extension.

Verdict: Appeal dismissed. Digital editions of newspapers were not zero-rated for VAT purposes during the period 2010-2016 as the term ‘newspapers’ in the VAT Act referred only to printed physical newspapers, not digital editions.

Source: News Corp UK & Ireland Ltd v Commissioners for His Majesty's Revenue and Customs [2023] UKSC 7