Posts Tagged ‘digital publishing’

Printed books are zero-rated for VAT in the UK. Ebooks are taxed at 20%.

Publishers have taken a softly-softly approach to VAT on ebooks, fearful that if they kick up too much of a fuss the Government will awaken to the fact that printed books are presently zero-rated and slap 20% on them overnight.

Such a move would decimate the British publishing industry — and by extension picture libraries, photographers and all the industry’s ancillary suppliers would take a huge hit. It’s therefore unlikely to happen, but who can predict what a politician may take into his head to do.

City law firm Berwin Leighton Paisner has announced on its website:

VAT treatment of ebooks – The firm is taking a groundbreaking case challenging HMRC’s view that ebooks are standard-rated for VAT purposes, in contrast with physical books which are zero-rated.”

Hard-nosed commercial firms like BLP do not take cases on pro bono, or challenge national or international law simply for the greater good. Therefore they’re doing this for one of their clients, and that client will have deep, deep pockets.

Who can it be? Who will benefit?

Well, the consumer will benefit if prices fall by 20% (they won’t). Publishers will benefit from a boost in sales.

But by far the biggest beneficiaries will be the retailers. Apple sells ebooks. Tesco sells ebooks. They will both see a hike in profits. BLP numbers Apple and Tesco among its gilt-edged list of clients.

Our digital publishing company Heritage Ebooks sells 50 illustrated ebooks from its site for every one ebook sold by the rest of the UK’s ebook sales outlets — Waterstones, Foyles, Tescos and so on — put together.

And for every one of our ebooks that we sell from our site, Amazon will sell twelve from theirs.

It is disproportionately huge. OK, so we’re tiddlers, microbes even, but I expect the proportions are similar whatever you publish.

Amazon has been subject to much opprobrium and contumely for selling ebooks to UK customers and charging the full 20% VAT while taking advantage of the 3% VAT they pay as a company based in Luxembourg. Like Starbucks, Macdonalds and KFC, large American companies have an aversion to paying their fair share of tax in Europe, and as their lawyers and accountants are sharper than ours, they can get away with it.

And now some organisation, through BLP, is challenging HMRC’s ruling on the grounds that charging different rates of VAT on print books and ebooks breaches EU law on fiscal neutrality.

Come on, this has to be Amazon. Who else could afford such a suit? And who else would profit more?

Amazon charge us, the publisher, for the bandwidth used when a customer buys and downloads a Heritage Ebook from them. Because our ebooks are highly illustrated, they have large filesizes and therefore incur high bandwidth usage fees. And because one or two books are downloaded via 3G rather than broadband, Amazon charges us across the board at mobile phone companies’ bandwidth fees.

The result is that for two of our titles, we are losing 10p on every sale made through Amazon because of their charges. Amazon are thereby forcing us to raise our prices.

And I thought their intention was to drive prices down.

 

 

 

Heritage Ebooks, for those who don’t know, is the digital publishing arm of VisConPro Ltd, the holding company of fotoLibra. So we’re sister companies: same owners, same shareholders, same staff.

We set up Heritage Ebooks to demonstrate the advanceImages system for supplying images to ebook publishers, and it’s already taken on a life of its own. I will be blogging extensively about advanceImages next month.

Heritage Ebooks’ first 40 titles are the Follies of England series, over a quarter of a million words written by me and Dutch art historian Wim Meulenkamp, and with a large percentage of the 1,900+ photographs taken by fotoLibra members. You can see our first titles here at heritage.co.uk — click on VIEW ALL TITLES.

Although we’re not awash with critical acclaim — nobody has yet reviewed a single title — there has been media interest. I was on BBC Radio 4′s flagship programme Today on Monday 31 October, talking about follies.

Today the Daily Mail ran a good, big feature on the amazing follies of Whitaker Wright, with a credit to Heritage Ebooks at the end. You can read it here.

All this, as our PR says, is grist to the mill. fotoLibra members are being paid a royalty on the sale of these books, so the more books we sell, the more they will earn. And ebooks never go out of print. So the money will keep coming in. More publicity means more sales. To date we’ve sold 99. Harry Potter this isn’t.

But it’s a start.