Sending data by email: licence to print money

Now here's a nice wrinkle of the laws governing this place that Tony Blair wanted to be "the best place for ecommerce anywhere in the world". If you send commercial data by email or over the Web, it's liable for VAT (17.5 per cent value-added tax, imposed in the UK on services) on the value of the data. Which of course with commercial data can be quite high.

But if you print that same data out and send it on paper, by post or fax, it is not liable for VAT.

This peculiar aspect of the UK's arcane tax laws was pointed out to us by Paul Redfern, who has a business offering data analysis services, crunching numbers for social survey data.

The reason? Apparently it's down to an EEC Directive of 1977, subsequently amended (many times), which aims to harmonise VAT on communications, including electronic communications. What the VAT is actually levied on depends on the means of communication, Dr Redfern was told. "If I post or fax data to you, the VAT is either included in the price of the postage stamp or the cost of the phone call. If I email the data, however, the VAT is levied on the value of the data I send you, not on the cost of communicating it."