I am helping with a VAT return for a client who sells on Ebay.
When a seller sells on Ebay they charge a fee for the item, and also in some cases charge a postage cost.
Item cost £120, Postage £12
I have been looking into charging the postage cost as a disbursement and reading the following:
HMRC disbursement webpage
HMRC Postage and delivery charges webpage
Disbursements section in Notice 700 The VAT Guide
Has anyone here succesfully claimed postage as a disbursement for an Ebay client?
In section 2 of the Postage and Delivery Charges help from HMRC (second link section 3.2) it mentions Royal Mail - so does this mean that postal disbursements can only apply to Royal Mail (and maybe parcel force) OR would courier companies such as City Link and UPS also be included?
I assume that if disbursements can be claimed, the postal cost would have to be identical to the price passed on to the customer, packaging charges (envelopes, tape etc) would not be exempt. Is this correct?
If the above was the case then perhaps it would be a good idea to encourage my client to only charge the exact postage fee on their listing and sink the cost of packing into the item cost to make it easier to get the total postage cost for all the items.
If couriers such as UPS and City Link do not save any vat then maybe free postage should be offered and the courier cost sunk into the item cost.
This way when I analyse the monthly paypal statements I can see that all the postage charges are indeed only for royal mail and can be treated as a disbursement.
Your thoughts and comments on this would be appreciated,