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Posted Fri, 28 Jun 2024 11:30:27 GMT by Eloise Brown
Can you please confirm if VAT would be charged in this situation? We have a company which is registered for VAT. Where we are facilitating a service provider tipping platform where customers pay the service provider a tip for their service but processed through our company's site. We add a processing fee for each transaction so therefore make money that way. The question is about VAT and whether the processing fees we are charging is VATable. Looking into it with HMRC case law ( https://www.gov.uk/hmrc-internal-manuals/vat-finance-manual/vatfin2450 ) shows that these fees would not be exempt from VAT and should be charged. However, does it make a difference that this is a tipping service which is exempt from VAT as opposed to a professing fee when buying a service or product? Thank you!
Posted Tue, 02 Jul 2024 09:16:55 GMT by HMRC Admin 21 Response
Hi Eloise B,
If it is a tipping service where there is no obligation to make a payment then this would normally be classed 'Outside The Scope Of VAT'.
However, if you are charging a processing fee then a supply for a consideration is taking place and so there would be a liability charge this at the standard rate of VAT.
Thank you.

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