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TNT cleared to challenge Royal Mail's VAT exemption

by Daniel Farey-Jones, Brand Republic 25-May-07, 14:45

LONDON - Royal Mail's VAT exemption could be challenged by rival TNT Post after a development in the High Court this month.

The High Court has granted TNT Post permission to apply for a judicial review of the exemption and is expected to rule soon that the European Court of Justice carry out the review.

All postal services provided by Royal Mail are VAT exempt, but services provided by all other operators are not.

TNT claims this distorts the postal market. It is a particular disadvantage in the case of business with banks and charities, which cannot recover VAT charges because they themselves are VAT exempt.

Nick Wells, chief executive of TNT Post, said: "The VAT distortion is subject to possible infringement proceedings by the European Commission. TNT Post is committed to providing its customers with an efficient and value-for-money service and will continue to fight for a level competitive playing field."

If the European Court of Justice carries out a review it is not expected to finish until the summer of 2009.