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Charging VAT on post

Postage is a non vatable item. When re-charging to customer can you charge them VAT on the post?
I am contemplating using the new flat rate vat scheme for small businesses and this would increase my profits if I am allowed to charge a customer VAT on postage and other non vatable items.
Dave Ince


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29th Mar 2004 16:21

From small seeds...
Didn't the Plantiflor case clarify that postal services are only exempt where provided by Royal mail, Post Office, Insignia, or Royal Mail, or whatever its called now. So if registered you charge VAT on your invoice total including the post service, but if you've joined the flat rate scheme pay VAT at the appropriate reduced percentage on your total receipts, which will include the VAT on the postal services - won't it?

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25th Mar 2004 22:47

Won't work
If what you are supplying to people is postage services (simply by getting Royal Mail to do it for you) then you don't charge VAT to your customers either. It's hard to see how you could have a business where the majority of what you billed for was postal services, but that was seen as being only an ancillary supply to something else.

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30th Mar 2004 08:18

It definately looks that way to me, a very grey area leaving me very unsure

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24th Mar 2004 16:37

If you supply VATable goods or services and postage is an incidental element of that service (an out of pocket expense) then the total invoice is VATable, even if you itemise the postage charges.

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By neileg
24th Mar 2004 16:44

Need to reailise what is going on here
The supply of postage services from the Royal Mail to you is not subject to VAT. However, you are not supplying postage services to your customer, you are recovering the cost. This is therefore standard rated.

Your customers, if VAT registered traders, will be able to recover the VAT you have charged, even if you actually pay a lesser amount under a flat rate scheme.

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25th Mar 2004 08:52

Am I right in saying that you could set up a business with the majority being postal services.
You would then have zero rated supplies, join the flat rate scheme and make a profit from VAT alone?

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