Murdoch’s News UK Loses Ruling to Reclaim Digital Newspaper Tax

A News Corp. unit won’t be able to claw back six years of taxes on its digital news operations, a London court ruled on Thursday.

The Court of Appeal said in a decision that it would be “impermissible” to extend tax relief for newspapers to their online siblings. The ruling only applies through 2016 and recent legislation has allowed digital services to claim the tax break.

Still, a victory in the case would have allowed Rupert Murdoch’s News UK and other online publishers to to claim millions in back taxes from the government.

News UK had challenged a decision that had exempted its physical newspapers like the Times of London from value-added tax, but not their digital news services. The Times’s pay-walled content online has become an increasingly vital source of revenue to the company.

However, to expand the meaning of newspapers “to cover the digital news services would be an impermissible extension of those provisions,” Judge Geoffrey Vos said in the Court of Appeal ruling.

The News Corp. unit., News Corp. UK & Ireland Ltd., will seek permission to appeal the ruling to the Supreme Court, a company spokeswoman said by email.

Equalized tax relief for digital and physical newspapers has been written into U.K. law following last year’s budget, which came into effect on May 1, 2020. It could cut the cost of digital newspaper subscriptions by up to 25 pounds ($34) a year, the government said at the time.

Thursday’s verdict has no effect on that policy, said a spokeswoman for Her Majesty’s Revenue and Customs, the U.K. tax authority.

©2021 Bloomberg L.P.

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