Vat on Postage

minner86

We currently sell goods online and are a Vat registered business.
We currently charge Vat for postage on Vat Rated goods.
All the carriers we use charge us Vat on their services which we claim back on our quaterly Vat return.

When my accountant works out the Vat chargable to our company based on profit he calculates it the whole amount we receive an order for including postage. Is this correct?


E.g if we sell an item for £6
and the customer chooses a next day delivery option costing them £6 (customers total price £12) should my accountant be working our Vat on the basis we have received an order for £6 or should he be working out the Vat that we have receive an order for £12 which includes the postage costs that we do not profit from.

minner86

Is there not a disimbursement where if postage is not obligatory, e.g if the customer has an option to collect in store but chooses postage which is shown as seperate charge.
I have just read this on HMRC and think we may qualify for disimbursements if I have read it right.

Also if my accountant is correct surely this needs looking at because if buy an item for 50p sell the same item for £1 and the customer chooses next day delivery at £6 then the workings out would show I need to pay Vat on £6.50 and not the not 50p which is the actual profit made.

System

Yes but you price the post and packing at a figure that covers the VAT element. Most businesses make a nice profit out of p&p quite apart from that on the goods themselves.

pjclar02

minner86 wrote: »

Is there not a disimbursement where if postage is not obligatory, e.g if the customer has an option to collect in store but chooses postage which is shown as seperate charge.
I have just read this on HMRC and think we may qualify for disimbursements if I have read it right.

Hello there

The recharged cost of postage is not a disbursement and is specifically referenced in HMRC's guidance as an item that is not a disbursement:

http://www.hmrc.gov.uk/vat/managing/charging/disbursements.htm