VAT on Postage and Carriage?

[sam.r]

Can someone please let me know or point me in the right direction to details on VAT and Postage.

We charge VAT on our Postage and Packing costs however some of our suppliers dont?

[smartie]

they should

[anonymous-user]

When i asked my accountant, if you charge the customer the EXACT amount it costs (via Royal Mail)you don't need to charge VAT, if you charge more than the Royal Mail cost then you must apply VAT.

[sam.r]

Dave_ST220 said:

When i asked my accountant, if you charge the customer the EXACT amount it costs (via Royal Mail)you don't need to charge VAT, if you charge more than the Royal Mail cost then you must apply VAT.

As that includes the packaging side / time to pack or any other reason?

[Eric Mc]

Dave_ST220 said:

When i asked my accountant, if you charge the customer the EXACT amount it costs (via Royal Mail)you don't need to charge VAT, if you charge more than the Royal Mail cost then you must apply VAT.

He is quoting in respect of the "recharge" scheme which is SOMETIMES allowed. However, you have to be VERY careful if you go down this route. The safest option is to charge VAT on the FULL value of the bills you issue to your customers. If your customers are VAT registered - they won't care as they will be reclaiming the VAT anyway.

[pgilc1]

Ultimately by offering to post the item, you're offering a service.

Therefore you must charge vat on it.

[grumbas]

From my time working at a mailing house, the only way to avoid VAT was to raise a 'postal float' invoice zero rated, and invoice all your services seperately. I think on the same invoice it becomes VATable.

For our clients it was worthwhile as whilst they could always reclaim the VAT it didn't help cashflow much...

[anonymous-user]

Eric Mc said:

Dave_ST220 said:

When i asked my accountant, if you charge the customer the EXACT amount it costs (via Royal Mail)you don't need to charge VAT, if you charge more than the Royal Mail cost then you must apply VAT.

He is quoting in respect of the "recharge" scheme which is SOMETIMES allowed. However, you have to be VERY careful if you go down this route. The safest option is to charge VAT on the FULL value of the bills you issue to your customers. If your customers are VAT registered - they won't care as they will be reclaiming the VAT anyway.

All we do is item purchased is say £12, P&P is charged at £4.50(actual Royal Mail charge £1.45), VAT then get slaps on the lot?? Royal Mail postage is zero rated for VAT but obviously we reclaim VAT on packaging etc.

[Eric Mc]

Royal Mail is specially EXEMPTED from VAT - being a government agency. It will be interesting to see what happens if Royal Mail is ever completely privatised. All the other "mail" and courier operations (Business Post, Securicor etc) charge VAT at 17.5% on their services. I'm sure that they would have to start charging VAT on normal stamps etc - just to level the playing field with their competitors.

Therefore, for the moment, if you want to pass on Royal Mail costs to your customers, you cannot avail of Royal Mail's special status.