VPOST4100 - Scope of the exemption: price and regulatory control

‘Price control’ refers to those services where there is a regulatory requirement to offer services at a public tariff which is uniform throughout the UK, and also to those services which are subject to price control in the interests of the public under the terms of Royal Mail’s licence or, from 1 October 2011, the regulatory conditions imposed by Ofcom under the Postal Services Act 2011 (PSA 2011, see VPOST3500). The latter includes services that are subject to a price cap, a set minimum price or a marginal control. Price control does not include services which Royal Mail opts to provide at a uniform tariff where there is no obligation upon it to do so. Nor does it include services where the price is indirectly constrained as a result of commercial competition.

Services which are not price-controlled are specifically excluded from exemption under Note 4(a) to Group 3 of Schedule 9 to the VAT Act 1994. Thus, where Royal Mail retains an obligation to provide them, but they are not price-controlled under regulatory conditions they fall out of exemption under this Note. However, Note (5)(a) brings these services back into exemption if Royal Mail is then obliged to offer the services at the same price to others under the terms of its regulatory conditions.

‘Regulatory control’ underpins the concept of public postal services and refers to those services that Royal Mail is obligated to provide under:

• before 1 October 2011, a licence duty, including those where - pursuant to a licence duty - Royal Mail allows private postal operators access (see VPOST4400) to its postal facilities; or
• from 1 October 2011, the regulatory conditions imposed by Ofcom.
• From 1 April 2012, the regulatory conditions imposed by Ofcom in relation to USO and Access services only.