4 replies to this topic

[Davee]

Anyone know in the UK, if you charge a paypal surcharge should you charge VAT on top?

eg
surcharge £1.00 ex vat
vat : £0.18

Thanks in advance

Dave

[muttley77]

As this is a service, you pay VAT on it (if you are VAT registered). Although before you do talk with HMCE national advisory. As they can usually gove you a legally binding answer.

[chrome orange]

The answer to your question is as muttley says.

Something to bear in mind tho

When you calculate the surcharge you should use the TOTAL ammount of you order inc vat. work out your surcharge then add vat to the surcharge.

eg

Order total ex vat £100
Order total inc vat £117.50

surcharge @ 10% £11.75 ex VAT
surcharge inc VAT £13.81

ORDER TOTAL = £ 131.31

[recentcoin]

I'm a Yank and we don't have VAT, but this looks a bit odd -
<snip>
Order total ex vat £100
Order total inc vat £117.50

surcharge @ 10% £11.75 ex VAT
surcharge inc VAT £13.81

ORDER TOTAL = £ 131.31
</SNIP>

Didn't you add VAT twice? I know that you guys pay a lot of taxes, but do they really make you pay taxes on your taxes?

RecentCoin

[kingdonk]

recentcoin, on Jul 23 2004, 03:19 AM, said:

I'm a Yank and we don't have VAT, but this looks a bit odd -
<snip>
Order total ex vat £100
Order total inc vat £117.50

surcharge @ 10% £11.75 ex VAT
surcharge inc VAT £13.81

ORDER TOTAL = £ 131.31
</SNIP>

Didn't you add VAT twice? I know that you guys pay a lot of taxes, but do they really make you pay taxes on your taxes?

RecentCoin

Yes we do pay to many taxes, vat and stealth taxes.
What happend was that, you pay VAT on the purchase, with the product costing £100 then adding VAT would bring the total up to £117.50.

The person is using paypal who offer a service, so you must pay VAT just like the customer would if he bought something from you.

The cost of using paypall for this sale would be £11.75 but after adding VAT it will cost you £13.81

So you dident ad VAT twice, your customer is paying the VAT on the purchase, and you are paying VAT on the paypall charges, but you are making the customer pay it.

Their is the small problem of your Paypall charges charging you for the total including VAT so the £11.75 you are paying is for the £117.50 so efectively you are paying more VAT becuase of the original VAT.

But as a UK company you can get back all VAT paid by the company, not your customers.
I think if you make your customers pay for the paypall cost, and vat, you can claim it back saying that you paid it as a service charge.