Ebay charging VAT on postage and sellers protection fees if seller uses Simple Delivery Service

[suehamon]

I believe that Ebay have used their new Simple Delivery System as a means of making more money.

I have just received an invoice which includes VAT charged on the postage and buyers premium portion of the purchase. These are listed on the invoice as fees on services supplied by Ebay.

It is very difficult to list items other than by using the simple delivery service, you can if you scroll down to the bottom of the page and select extra large items even if they are not and choice your own postage options.

I assume then that the buyer will not be charge VAT as Ebay are not providing any service in this option.

[4_bathrooms]

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@suehamon wrote:

I believe that Ebay have used their new Simple Delivery System as a means of making more money.

I have just received an invoice which includes VAT charged on the postage and buyers premium portion of the purchase.

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That's perfectly normal. eBay are a VAT registered business so all their fees have a VAT element. Where private sellers are concerned the Buyer Protection fees are advertised inclusive of VAT but a VAT invoice will show the VAT breakdown:

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@suehamon wrote:

I assume then that the buyer will not be charge VAT as Ebay are not providing any service in this option.

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All the delivery options available under Simple Delivery include a VAT element. eBay uses Royal Mail's Tracked 24/Tracked 48 services which are not VAT-exempt retail services. Again, the prices advertised by eBay are inclusive of VAT.

[jonvue]

ebay should be sending all the VAT they collect to HMRC, but it is really annoying that ebay no longer allow you to arrange your own delivery because the VAT cost collected by ebay has to be paid by the seller or the buyer, making the margin lower for the seller or the item more expensive for the buyer 😞

[4_bathrooms]

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@jonvue wrote:

ebay should be sending all the VAT they collect to HMRC

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They do. Well, they pay HMRC the difference between their input and output VAT.

eBay are a VAT registered business - that means they charge VAT on any services they sell that aren't zero-rated or exempt from VAT. Where private sellers and buyers are concerned eBay's advertised Buyer Protection fees and Simple Delivery postage/shipping prices are shown inclusive of VAT.

eBay aren't making any extra money from the VAT element and neither you nor your buyers are paying any more than the amounts eBay advertises. 

[suehamon]

I understand that Vat is payable on all services provided by eBay but previously when the seller  could choose their own postage / delivery options  without eBay providing the now compulsory service the customers only paid the price quoted by the seller as being the postage/ delivery cost without any added extra charges. Now when you have no option but to use the simple delivery scheme if you want to sell on eBay and as they now provide a compulsory service you are charged a fee where previously you were not resulting in yet more costs for the buyers. 

[jonvue]

@4_bathrooms 

"... that means they charge VAT on any services they sell that aren't zero-rated or exempt from VAT."

You seem to have misunderstood the law! Royal Mail postage is zero rated, but ebay selling it as a service means they are obliged by law to charge VAT on it. ebay like any other buiness have to charge VAT on all services they sell or re-sell INCLUDING those that are zero-rated or exempt from VAT.

But that wasn't my complaint anyway. My point is that for those of us who aren't VAT registered, having to buy Royal Mail services through Simple Delivery rather than being able to buy them direct comes at a 20% additional cost.

[4_bathrooms]

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@jonvue wrote:

@4_bathrooms 

"... that means they charge VAT on any services they sell that aren't zero-rated or exempt from VAT."

You seem to have misunderstood the law! Royal Mail postage is zero rated, but ebay selling it as a service means they are obliged by law to charge VAT on it. ebay like any other buiness have to charge VAT on all services they sell or re-sell INCLUDING those that are zero-rated or exempt from VAT.

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Royal Mail's retail services are exempt from VAT as explained on this page. Retail services are 1st Class & 2nd Class (including Signed For) and Special Delivery Guaranteed. All other services (including Tracked 24 & Tracked 48) are subject to VAT even if you purchase them direct from Royal Mail or at a Post Office counter.

For items that can still be opted-out of Simple Delivery the label cost is exactly the same whether purchased via eBay or Royal Mail.

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@jonvue wrote:

@4_bathrooms 

But that wasn't my complaint anyway. My point is that for those of us who aren't VAT registered, having to buy Royal Mail services through Simple Delivery rather than being able to buy them direct comes at a 20% additional cost.

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The additional cost is not due to VAT. eBay have a business account with Royal Mail which means they receive discounts due to the volume of post they send; eBay were very likely able to negotiate their own rates based on the sheer volume of business they would be sending Royal Mail's way.  Tracked 24 and Tracked 48 are vatable services so eBay will be remitting the difference between the VAT charged by Royal Mail and the VAT eBay charge on the service to HMRC. VAT would not explain a 20% difference because eBay are not paying the full price to start with and they can reclaim the input VAT.

The most likely explanation for the disparity is eBay underwrite any loss or damage in transit when an item is sent via Simple Delivery. Business accounts with volume discounts typically don't offer any compensation whatsoever so it's simply a premium eBay have slapped on the price to cover the cost of the insurance they provide.

[jonvue]

@4_bathrooms  Doh! I said nothing about items that can be opted out of Simple Delivery.

And there DEFINITELY IS an additional cost to a non-VAT registered seller from being forced to use Simple Delivery.  It's that simple!!

You are misinterpreting everything I'm saying so I'm not wasting any more time on this.

[cobwebcottage]

'But that wasn't my complaint anyway. My point is that for those of us who aren't VAT registered, having to buy Royal Mail services through Simple Delivery rather than being able to buy them direct comes at a 20% additional cost.'

This is completely irrelevant as no seller using Simple Delivery would be VAT registered. SD applies to private sellers only and this post should not be on the business boards.

[jonvue]

I'd heard that ebay are going to apply SD to business sellers too, and not all business sellers will be VAT registered so the issue will affect them similarly.

[cobwebcottage]

Speculation, and if and when it happens, I am sure that business sellers will discuss the pro's and cons on the business boards.

[jonvue]

That's good, I'll leave you to it then. Sorry to have disturbed your day.