CHAPS fees

AskAsk

When you buy or sell a property, there is a CHAPS fee for payment, which is fair enough, but why do solicitors add VAT to the CHAPS fee?

It's not a payment to them and the bank that charges the CHAPS payment doesn't add VAT, so why is the solicitor passing this on to you?

user1977

Most of it is the solicitor's admin fee rather than the bank's fee to the solicitor. And I think even if it was solely the bank's fee, the solicitors are entitled to add VAT to it.

Bookworm105

because the fee is for the service of processing the payment
VAT is charged on the provision of services, ie a human doing something 
the fact the CHAPS charge is itself exempt from VAT does not alter the fact a service is being performed in processing it.

se2020

My mortgage lender has said it will be £12 (no mention of vat) to transfer the funds to the solicitor.  I pay that to the lender directly.

The solicitor is charging £28+vat to receive it!!
Then another £28+vat to send it onto the sellers.

grumpy_codger

VAT is red herring. Tesco charge you VAT on some goods too, they just don't show it explicitly in their receipts.

For a private customer it's the full price that matters.

AskAsk

Bookworm105 said:

because the fee is for the service of processing the payment
VAT is charged on the provision of services, ie a human doing something 
the fact the CHAPS charge is itself exempt from VAT does not alter the fact a service is being performed in processing it.

i see, so it isn't actually the charge that the bank makes for a CHAPS payment but it includes the cost of the administration of the payment as well.  that would make more sense and would explain why this fee seems to differ from one solicitor to another in terms of the amount.  i had thought it was because their banks charge different amounts for CHAPS payment because they have different banks.

AskAsk

se2020 said:

My mortgage lender has said it will be £12 (no mention of vat) to transfer the funds to the solicitor.  I pay that to the lender directly.

The solicitor is charging £28+vat to receive it!!
Then another £28+vat to send it onto the sellers.

i know, it's ridiculous isn't it?  My solicitor charges £30 + VAT 

grumpy_codger

AskAsk said:

Bookworm105 said:

because the fee is for the service of processing the payment
VAT is charged on the provision of services, ie a human doing something 
the fact the CHAPS charge is itself exempt from VAT does not alter the fact a service is being performed in processing it.

...   had thought it was because their banks charge different amounts for CHAPS payment because they have different banks.

Different banks charge different amount too.

AskAsk

grumpy_codger said:

AskAsk said:

Bookworm105 said:

because the fee is for the service of processing the payment
VAT is charged on the provision of services, ie a human doing something 
the fact the CHAPS charge is itself exempt from VAT does not alter the fact a service is being performed in processing it.

...   had thought it was because their banks charge different amounts for CHAPS payment because they have different banks.

Different banks charge different amount too.

i know.  First Direct is the only bank I know that doesn't even charge for a CHAPS payment 

grumpy_codger

AskAsk said:

grumpy_codger said:

AskAsk said:

Bookworm105 said:

because the fee is for the service of processing the payment
VAT is charged on the provision of services, ie a human doing something 
the fact the CHAPS charge is itself exempt from VAT does not alter the fact a service is being performed in processing it.

...   had thought it was because their banks charge different amounts for CHAPS payment because they have different banks.

Different banks charge different amount too.

i know.  First Direct is the only bank I know that doesn't even charge for a CHAPS payment 

Santander doesn't charge Edge customers.

DavidT67

grumpy_codger said:

AskAsk said:

grumpy_codger said:

AskAsk said:

Bookworm105 said:

because the fee is for the service of processing the payment
VAT is charged on the provision of services, ie a human doing something 
the fact the CHAPS charge is itself exempt from VAT does not alter the fact a service is being performed in processing it.

...   had thought it was because their banks charge different amounts for CHAPS payment because they have different banks.

Different banks charge different amount too.

i know.  First Direct is the only bank I know that doesn't even charge for a CHAPS payment 

Santander doesn't charge Edge customers.

Nor Santander Edge Up or Private current account customers. 

Solicitors charge for their time, so OP shouldn't be shocked that spending time to undertake a transaction incurs a cost.