The Business Magazine - B2B Business News - Site Logo
The Business Magazine March 2024
Read now
PICK YOUR EDITION
Sponsored Content

Have you been contacted by HMRC about your VAT accounting?

Sponsored by
Share
iStock
iStock

Daniel Pienaar, Audit Manager and Head of Saffery’s Accounts and Outsourcing Division in High Wycombe, advises on why HM Revenue & Customs (HMRC) is contacting certain VAT registered businesses.

Saffery is aware of HMRC writing to businesses who use third-party payment processors with respect to VAT accounting. The key point is that where VAT is due, it’s accountable on the full value of the supply, and not on a value which is net of the payment processors’ fees. For example, where a supplier makes online sales totalling £6,000 inclusive of VAT at the standard rate, but receives £5,750 in cash via the payment processor which is net of their fees of £250, the VAT which the supplier needs to be accounted for on its supplies is £1,000 (1/6th of £6,000 based on a 20% VAT rate) and not £958.33 (1/6th of the cash amount received).

It would appear HMRC has grown concerned that suppliers using the services of third-party payment processors are not bringing the right of amount of VAT to account. The letters which HMRC is now sending out is urging businesses to check they’re accounting for VAT correctly and to correct any errors noted, in the appropriate manner.

It’s not clear what records HMRC is relying on when selecting which VAT registered businesses to write to concerning this matter.

It’s vital to seek advice from a VAT specialist if your business does receive a letter from HMRC regarding VAT accounting when payment processors are being used to facilitate payments by customers for orders placed. The use of such providers is prevalent in the e-commerce space, and the likes of Paypal and Stripe for example are commonly used by online sellers. Suppliers should ensure they have access to data which clearly indicates the gross value of supplies made, in order for the appropriate amount of VAT to be reported. Such data forms a vital element of the records a VAT registered business trading online, is required to keep.

For further details, please get in touch with Daniel Pienaar by emailing [email protected] or calling 01494 464666.

Saffery’s Accounts and Outsourcing Division in High Wycombe focuses solely on offering outsourcing related services to businesses including statutory accounts preparation, bookkeeping; VAT return review and preparation; management accounts preparation; payroll; registered office duties and Xero software training and support. The team is fully supported by a team of experts – from Audit and Assurance, Business Advisory, VAT and Corporate Finance advisers through to Tax and Trust experts from across the firm, should businesses require more specialised advice.


Stephen Emerson is the Managing Editor of The Business Magazine and is responsible for the publication's print publications and online properties including the newly launched Biz News websites in Hampshire and Dorset.

Stephen has been a journalist for 20 years and has worked at local, regional and national publications and led a team which made The Scotsman website one of the fastest growing news sites in the UK with over eight million monthly users.

He has a keen interest in technology, property and corporate finance and telling the stories of the people behind the successful firms in these sectors.

Related topics

Related articles

Upcoming events

view more
01
May

South Coast Property Forum: Networking Lunch

Ennios Ristorante
Southampton
More info
06
Jun

South Coast Property Awards 2024

Hilton Southampton
Utilita Bowl
More info
12
Jun

Leadership Roundtable: Developing strategies for financial returns over the next decade

Herrington Carmichael, Farnborough Aerospace Centre, GU14 6XR

More info
18
Jul

Thames Valley Tech & Innovation Awards 2024

Reading FC Conference & Events
Select Car Leasing Stadium, Reading
More info
12
Sep

Thames Valley Property Awards 2024

Ascot Pavilion
Ascot Racecourse
More info
03
Oct

South Coast Tech & Innovation Awards 2024

Hilton Southampton
Utilita Bowl
More info
07
Nov

Thames Valley Deals Awards 2024

Reading FC Conference & Events
Select Car Leasing Stadium, Reading
More info
21
Nov

Hampshire Business Awards 2024

Farnborough International
Exhibition & Conference Centre
More info

Related articles