The always speaking principle of statutory interpretation could not be used to interpret the word newspapers to include digital newspapers for the purposes of having them zero rated for Value Added Tax

1. Whether the always speaking principle of statutory interpretation could be used to interpret the word newspapers to include digital newspapers for the purposes of having them zero rated for VAT.
2. Whether the Court of Appeal erred in finding that the appellant’s supplies of digital editions of The Times, The Sunday Times, The Sun and The Sun on Sunday were not supplies of "newspapers" within the meaning of the Value Added Tax Act 1994 (the VAT Act) such that they could not be zero-rated for Value Added Tax (VAT) during the period between August 30, 2010 to December 4, 2016.

1. The modern approach to statutory interpretation in English (and UK) law required the courts to ascertain the meaning of the words used in a statute in the light of their context and the purpose of the statutory provision. Within that modern approach, it was also a well-established principle of statutory interpretation that, in general, a provision was always speaking.
2. What was meant by the always speaking principle was that, as a general rule, a statute ought to be interpreted taking into account changes that had occurred since the statute was enacted. Those changes could include technological developments, changes in scientific understanding, changes in social attitude and changes in the law. It did not matter that those changes could not have been reasonably contemplated or foreseen at the time that provision was enacted. Exceptionally, the always speaking principle would not be applied where it was clear, from the words used in the light of their context and purpose, that the provision was tied to an historic or frozen interpretation.
3. The great merit of the always speaking principle was that it operated to prevent statutes from becoming outdated. It would be unrealistic for parliament to try to keep most statutes up to date by continually passing amendments to cope with subsequent change.
4. It was well established that zero-rating provisions ought to be interpreted strictly because they constituted exemptions to the general principle that all supplies of goods and services for consideration by a taxable person were subject to Value Added Tax (VAT) they ought not, however, be interpreted so strictly as to deprive the exemption of its intended effect.
5. The need for strict interpretation was particularly marked where, as in the instant case, it did not involve mandated European Union (EU) exemptions, but rather national law exceptions tolerated by EU law within the constraints of the EU standstill provision.
6. In the present case, the standstill provision in article 110 of the Value Added Tax, Directive 2006/112 meant that the categories of zero-rating could not be expanded or extended beyond those which existed on December 31, 1975.
7. The purpose of the standstill provision tolerating the maintenance of zero rates was to prevent social hardships which were likely to follow from the abolition of exemptions provided for by the national legislature but not included in the sixth directive. In accordance with that purpose and its wording, the scope of derogation allowed by the standstill provision was restricted to what was expressly covered by the national legislation on December 31, 1975. The content of the national legislation in force in December 31, 1975 was decisive in ascertaining the scope of supplies allowed and the scope of the exemption laid down in that legislation was not to be extended.
8. In interpreting the word "newspapers” the starting point was the ordinary meaning of the word "newspapers” in its context as at December 31, 1975. At that date, “newspapers” referred only to printed newspapers. Those were the only kind of newspapers which existed at that time. Digital editions lay many years in the future. Although there was no evidence directly in point, it would appear that the same would have followed even if one was to take the relevant date as being January 1, 1991 in accordance with the principle VAT Directive, and probably even if the relevant date had been September 1, 1994 when the VAT Act came into force.
9. The purpose of standstill provision tolerating the maintenance of zero rates was to prevent social hardship likely to follow from the abolition of existing national law exemptions. However, no social hardship could follow from the exemption of digital editions from the ambit of the standstill provisions as, at the material time, nobody had access to them. The zero-rating for newspapers was seen as a transitional face with the ultimate purpose being harmonization with no derogations at all. That purpose, consistently with the strict approach to exemptions and the effect of the standstill provision, indicated that a narrow meaning ought to be given to the word “newspapers” and, in particular, was best seen as it had a limiting effect on how far one could apply the always speaking principle.
10. The principle of the always speaking principle was to be applied with regard to the EU law constraints imposed by the standstill provision and the principle of strict interpretation of exemptions. Such application was reinforced by a purpose of the law on VAT, as seen from the perspective of EU law, as being harmonization with no derogations. These constraints meant that, the always speaking principle was significantly limited so as to ensure it did not conflict with the requirement for zero-rating for newspapers to be strictly construed and not extended.
11. The EU law constraints meant that the instant case was one in which the court ought to be less willing to extend expressed meanings than in other cases where a liberal or permissive approach was called for. In the present case, the always speaking principle fell to be applied at the less liberal end of the scale.
12. On December 31, 1975“newspapers” would be understood to be the news communicated through the medium of print in a physical form. That was reflected in the name itself, which referred to the news on paper. Throughout the history of newspapers up to that time they had only existed in printed physical form. Although news was also communicated through the medium of radio and television, such news bulletins would not be understood to be or to be akin to newspapers. The medium of print in a physical form would have been regarded as a defining characteristic of a newspaper in 1975.
13. Another defining characteristic at that time was that the buyer of a newspaper obtained complete access to the news in that paper. There was no requirement of connectivity. Access did not depend on owning or buying something else, such as a device.
14. There were two distinguishing characteristics, first, a physical printed form and, secondly, accessibility without need for a device. Those two characteristics were a reflection of there being a conceptual difference between newspapers in 1975 and digital editions. That difference was a radical one which opened up all sorts of possibilities for interactive communication. It was those features which, along with the strict and non-expansive interpretation required by EU law, which rendered it clear that digital editions fell outside the same genus of facts as newspapers in 1975. In other words, those underlying fundamental features, viewed in the light of the EU law constraints, meant that the difference between newspapers in 1975 and digital editions was one of kind not merely degree.
15. The fundamental conceptual difference between print newspapers and digital newspapers was that the former were goods whereas the latter were services. Given the significant difference between print and digital editions of newspapers, it could not be said to be irrational to distinguish between the VAT treatment of printed newspapers and digital editions.
16. The rationality of such a distinction was borne out by the fact that it had been drawn in EU VAT law. Directive 2009/47/EC allowed reduced rates to be extended to newspapers (or books etc.) supplied by physical means of support, but did not permit an extension of reduced rates to newspapers (or books etc.) dependent on electronically supplied services.
17. The technological development that led to digital editions was a radical one which took one a long way from a physical item and opened up all sorts of possibilities for interactive communication that were not possible with print newspapers. Although the contents of the digital editions were the same or very similar to physical newspapers, it was clear that digital newspapers were in other respects very different from print newspapers.
18. Having regard to the constraints of EU law, the always speaking principle could not be applied so as to interpret newspapers as one that covered digital editions. That was not to close off entirely the operation of the always speaking principle in that context. For example, it was not in dispute that new versions of print newspapers e.g. those produced by computer rather than hot metal presses and which contained colour rather than black and white photos, would all be included even if computers and colour photos were not used and were possibly not even contemplated in 1975. Similarly, if paper was replaced by a substitute physical material, newspapers published on such material would also likely be included. Those examples, however, were very different from digital editions and did not involve the adoption of an impermissibly expansive approach, as would be required to include digital editions.
19. The EU Commission and the UK Parliament had made reforms which explicitly dealt with electronically supplied newspapers in 2018 and 2020 respectively. Application of a wide-ranging approach so that digital newspapers were already covered by zero-rating for VAT prior to 2020 would entail accepting that parliament was acting unnecessarily and on a mistaken basis.

1. The always speaking principle had no role to play in the present case. There was no reason why the fact that digital editions did not exist at the time when provisions for the zero-rating of newspapers in the UK were originally made in 1972, or when the VAT Act was enacted in 1994, ought to give rise to any presumption that the term was to be read as including the digital editions after they were invented. When technological progress occurred, the proper approach was to ask, whether in accordance with ordinary principles of interpretation, the newly invented object fell within the meaning of the statutory language, interpreted in the light of the legislative purpose.
2. It was equally unsound to draw an opposite inference that, because digital editions did not exist when the legislation was enacted, they could not fall within the meaning of the term “newspapers” as used in the legislation. To ask whether in 1972, or 1994, the word “newspapers” would have been understood as referring to the digital editions was to ask the wrong question. The answer was obviously “no”, as at that time newspapers only existed in printed form. It followed that, the term could not refer to digital editions, but it did not follow that digital editions when they were invented could not fall within its meaning. In 1972, newspapers at least in the UK were exclusively printed using hot metal type, whereas today printed editions were produced by creating a computerized version of the whole publication, which was then transferred to paper using an entirely different technology. That did not prevent modern printed editions from being classified as newspapers. Nor would it do so if, for example, they were no longer printed on paper but on some other, newly developed material.
3. As a matter of ordinary language, the word “newspapers” was capable of being used in a narrow sense which treated its physical, printed form as a defining characteristic. It was also capable of being used in a broader sense which included digital editions. When tablet editions of the Times were first produced in 2010, one could quite naturally have said that they read their newspaper on a tablet. The same applied to other forms in which the digital editions were produced during the relevant period. Such use of the term did not involve giving the term newspaper a new meaning. If in 1972 a digital edition had been imagined by someone with the power to predict the future, it could just as well have been described then as a new form of “newspaper”. The question whether the digital editions were “newspapers”, could not be answered by consulting the ordinary meaning of the word.
4. The question whether digital editions were “newspapers”, could not as well, be answered by a linguistic analysis of the words used to describe other items included in the same group as “newspapers.” To ascertain the meaning of the term it was necessary to consider the nature and purpose of the legislation in which the term was used.
5. Where the European VAT legislation provided for mandatory exemptions, the terms used to specify the exemptions ought to be interpreted strictly. That was because they constituted exception to the general principle that VAT was to be levied on all goods and services supplied for consideration by a taxable person.
6. Where the relevant exception was one created by national law, the rationale for interpreting it strictly was greater. That was because such an exception derogated not only from the general principle that VAT was to be levied on all goods and services, but also from the aim of harmonizing the laws of member states and establishing a common system of VAT across the EU.
7. At all relevant times the UK could only zero rate items if the decision to do so had been made for clearly defined social reasons and for the benefit of the final consumer. In 1972, the UK had a very broad discretion to decide which supplies of goods and services was to be given preferential tax treatment through zero-rating. It was a matter of political choice for parliament to assess what weight was to be given to diverse interests and contributions to social welfare across the full panoply of goods and services supplied to consumers. Once reduced rates became available as well as zero rates, the assessment became even more complex.
8. It was common ground that the social policy reasons which lay behind the decision to zero rate the items described in what became group 3 of Schedule 8 to the VAT Act were the promotion of literacy, the dissemination of knowledge and democratic accountability by having informed public debate. It could not be inferred, however, that parliament’s intention was to zero rate the supply of all goods and services which potentially advanced those policy goals for the benefit of the final consumer.
9. A digital edition was only accessible by a person who owned a computer or other electronic device. While today the possession of such a device in the form of a mobile phone had become almost universal, during the relevant period that was far from being the case. The need for such a device had implications for the size and social profile of the class of consumers who stood to benefit from any decision to zero-rate digital editions. Another potentially relevant difference was that the supply of a digital edition was much less costly than the supply of printed edition because it did not involve the expenses of producing and distributing a physical item. At a more abstract level, for the purposes of VAT, the electronic delivery of a digital edition constituted a supply of services whereas the delivery of a printed edition was a supply of goods.
10. While the rules on VAT were in principle intended to tax the supply of goods and services in the same way, access to information which only existed in electronic form was a different type of consumption which offered different benefits to consumers from the supply of a physical object. In the circumstances, a decision to treat electronically supplied services for VAT rating purposes from the supply of goods with the same or very similar content could not be regarded as irrational.
11. It was not possible to say that the intended effect of adopting an exceptional tax treatment for “newspapers” ought to have included applying that treatment to the digital editions. Given the requirement to interpret the term strictly, the narrower possible meaning of the term “newspapers” ought therefore be preferred, which treated printed form as a defining characteristic.
12. That was not to say that it was desirable or good social policy to tax digital editions differently from printed editions. The decision was taken after such an extension was permitted by Council Directive (EU) 2018/ 1713, where digital as well as printed editions were to be zero rated. That was the law since May 1, 2020. However, that decision was one for the parliament to take subject to the constraints, for as long as they applied EU law, it was not a decision pre-empted by the zero-rating of newspapers in 1972.
13. The various legislative changes made after “newspapers” were zero rated, did not affect the correct interpretation of that term, save for one exception. That was the amendment of the VAT Act in 2020, to add, as a new item 7 in group 3 of Schedule 8, the publication listed in items 1 to 3 when supplied electronically. The implication of that addition was that items 1 to 3 did not themselves cover books, newspapers and periodicals when supplied electronically. That point could not of course have been made during the relevant period, as at that time Item 7 had not yet been added.
14. The term “newspapers” in Item 2, group 3, Schedule 8 of the VAT Act did not include the digital editions, with the result that the supplies of the digital editions by appellant during the relevant period were not zero-rated.

 (a) a taxable supply made by a registered person in Kenya; (b) the importation of taxable goods; and (c) a supply of imported taxable services.

 (a) in the case of a zero-rated supply, zero per cent; (aa) in the case of goods listed in section B of Part I of the First Schedule, eight percent of the taxable value, effective from the date of assent; (ab) in the case of the supply of liquefied petroleum gas including propane, eight percent; or (b) in any other case, sixteen per cent of the taxable value of the taxable supply, the value of imported taxable goods or the value of a supply of imported taxable services. (3) Tax on a taxable supply shall be a liability of the registered person making the supply and, subject to the provisions of this Act relating to accounting and payment, shall become due at the time of the supply.