The Direct Marketing Association’s (DMA) new VAT Helpdesk has warned marketers that they could face hefty VAT bills if they do not come to grips with legislation.

The helpdesk said any organisations that use print-based direct marketing media are unable to reclaim VAT and look to their suppliers to minimise their VAT liability through the design of the printed material and managing the contents of mail packs so that they are classified as ‘zero rated’.

VAT liability can also be reduced by applying special exemptions for charities and using techniques such as ‘single supply’.

Companies realise that they are liable for penalties in the VAT is not assessed correctly, but some do not fully understand HMRC guidelines.

Richard Evans, head of compliance and legal services for the DMA, said: “We’re aware of a number of companies that have been caught out by misinterpreting the VAT rules. Unfortunately it is a case of ‘supplier beware’. In the past year we’ve seen some companies being hit by HMRC with bills totalling millions of pounds.

“There’s a huge grey area, for instance, around the point at which you are no longer supplying zero rated goods to a full VAT rated service. That’s why our free helpline will help companies navigate the complexities of the VAT rules in this area.”