Newsmedia companies could have a financial disincentive to reporting breaking news after News UK argued its digital edition was exempt from the country's 20 per cent Value Added Tax.

HM Revenue and Customs may yet take the case to the court of appeal, but as it stands, the News Corp unit could be able to reclaim tax on subscriptions it has collected.

Key to the ruling is that its Times digital edition fits the definition of a newspaper because it is produced in periodic editions. Book publishers have also campaigned against what they have called the "reading tax" on online editions of their books.

The Times' occasionally updated website and tablet edition was deemed to meet the definition, while constantly updated outlets such as BBC News and Guardian websites did not.

When VAT was introduced in 1972, newspapers were specifically excluded because inclusion would have been a "tax on knowledge", but digital editions were not envisaged by the law.