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VAT on Worldpay and Paypal

VAT on Worldpay and Paypal

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Could someone kindly help me with charges made by Paypal and Worldpay.

My understanding has always been that Paypal charges and fees are exempt from VAT.

I assumed Worldpay card charges were also be exempt but googling Worldpay it seems that their card machine charges do include VAT.

Maybe Worldpay and Paypal are 2 completely different things but if someone could confirm that it is correct that Worldpay charges are VATable but Paypal charges are exempt that would be very helpful.

Thank you


Replies (3)

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By Duggimon
11th Jul 2019 10:46

Worldpay charges are mostly VAT exempt with the exception of the component of the charge that is an admin fee, that part is VATable.

A typical Worldpay invoice might be for £440 with maybe £3.50 input VAT.

If paypal only charge the finance charge element then their charges are entirely exempt.

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Replying to Duggimon:
By atleastisoundknowledgable...
11th Jul 2019 12:43

Beat me to it!

I think WorldPay’s admin fees are normal £19.99+VAT. If you don’t complete some sort of online licensing disclosure for them they sometimes charge £9.99+VAT until you do.

There may also be a rental charge for the PDQ machine, which will be vatable.

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By johnt27
11th Jul 2019 15:37

As PayPal's service is delivered from outside the UK any transaction charges should be reverse charged, same applies to Stripe if you use it. Stripe issue proper invoices for fees on a monthly basis, which clearly indicate reverse charge applies, if you have a business account set up.

I'm not sure on Worldpay - haven't used them in years, nor do I have many clients who do anymore so can't check records, but the same would apply.

HMRC should pick this up on VAT inspection. There's no loss to HMRC or the client, but if you have charities or other client's hovering around the VAT registration limit this treatment, if costs are significant, could push them into being VAT registered.

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