HELP Please Vat with Postage

celestial_2

Hi,
I run a Small business trading below the vat limit.
I was wondering if i go vat Registered would i be able to reclaim the Vat on the cost of the Special DElivery cos i could claim back the vat on all the Packaging supplies etc.. and if i went to a Courier company i could claim the vat back using them,
But i'm unsure if i could with the Post Office.

celestial_2

if it is of any help i sell items which has a vat rate of 15%

stressedoutmumof1

As far as I know Royal Mail are exempt from charging VAT, therefore there would be no VAT to claim back.

Tea3

I was told the same a while back - I can charge and claim back vat on things like courier costs as they tend to charge vat but I cant charge customers vat on standard royal mail costs nor can I claim vat on my royal mail postage expenses (as no vat on them).

KieranB

Postage with Royal Mail is excempt from VAT..

LittleVoice

However, if you charge your customers for postage (whether Royal Mail or not) I thought you needed to charge VAT if you were VAT-registered.

celestial_2

that is what i am thinking as postage receipts come with a VAT Number.
ANd it is not like just buying stamps with special delivery you are actually paying for the service aswell.

Pennywise

celestial wrote: »

that is what i am thinking as postage receipts come with a VAT Number.
ANd it is not like just buying stamps with special delivery you are actually paying for the service aswell.

Post office don't charge VAT on postage services so there's nothing to reclaim. Having a VAT number on a receipt is irrelevant - for anything, you need a VAT invoice or a less detailed VAT invoice, both of which have to at least say that VAT was charged at whatever rate - if you don't have a receipt showing the VAT charged, you can't reclaim it.

LittleVoice

I agree that the Post Office/Royal Mail are not charging VAT on postage - whether that is the stamps or the additional charges.

However, if you are yourself VAT-registered I think there is a need to add VAT to postage charged to clients. It is quite a while since I was invoicing clients for fees and disbursements so I may be wrong on that.

Tea3

I am very confused now and worried that I have been doing this wrong for the past year (eeks) - have emailed my accountant to double check and will update on here once he gets back to me as am assuming a registered accountant should know the right way to charge or not for vat on royal mail postage. Have to admit from what I have now read on internet it looks vat liable for all postage on vatable goods which contradicts what a few forums and a guy at hmrc course told me!

JasonLVC

Have a look at this link to HMRC website :-

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000114&propertyType=document

In simple terms, ONLY the Royal Mail can sell stamps/postage exempt.

So there is no VAT charged by Royal Mail for postage/special delivery, etc. If you used a courier firm who was not the Post office/Royal Mail then the courier will charge you VAT at 15% and you would be able to reclaim that VAT.

If you sell goods and charge postage to your customers (ie, P&P), then as you are not the Royal Mail, your P&P will be a taxable supply (ie, VAT needs to be charged). But how much VAT?.

If you sell zero rated goods (books, kids clothes), then the P&P follows the same rate as the goods (ie, your P&P is zero rated). If you sell standard rated goods then your P&P will be standard rated too. If you sell a book with a CD on it then it gets a bit more complicated so let's not go there unless this is what you sell.

Before registering for VAT, you should realise you would also then have to charge VAT on your sales to your customers and so you need to do the maths and see if your market can tolerate an overnight price increase.

If you sell mainly B2B then register for VAT as most business will be able to recover the VAT. If B2C, the consumer may go elsewhere for the goods (maybe a trader who is not VAT registered).

It all comes down to your goods and your market place, but hope we've at least dealt with the postage thing.!